85 Problem 1-(25 points) Acme Company was organized on January 1, 2013 and is authorized to...

Transcribed Image Text:

85 Problem 1-(25 points) Acme Company was organized on January 1, 2013 and is authorized to issue 1,000,000 shares of $1 par value common stock. The following transactions occurred during 2013 in the order listed. Required: Transaction Analysis (21 pts total) a. Indicate how each transaction affects TOTAL STOCKHOLDERS' EQUITY and RETAINED EARNINGS by writing the dollar amount of the increase or decrease. If there is no effect, write NO EFFECT. Indicate decreases with brackets. b. Indicate whether the transaction will be shown in the FINANCING SECTION of the Statement of Cash Flows Transaction Description Issued 200,000 shares of its own common stock for $5 per share.. Woup. 020 Issued 10,000 shares of its own common stock in exchange for a machine with a fair market value of $50,000. Purchased 20,000 shares of its own stock at $4 per share. The 20,000 shares are held as treasury stock. 90,000 Declared a 51 per share cash dividend on common stock outstanding Paid the dividend declared above. 210,000 Purchased 100 shares of stock in an unrelated company as an investment at a price of $10 per share. 1000 Sold 5,000 shares of its treasury stock at $5 per share. 25,00 Impact on Total Stockholders' Equity Dollar Amount AND Increase (Decrease) OR No Effect 1,000,000 50,000 Impact on Retained Earnings Dollar Amount AND Increase (Decrease) 80,000 7/220,000 Is the transaction reported in the FINANCING Section of the Statement of Cash Flows? Yes or No Or No Effect 1,000,000 Yes 50,000 Yes no no effect no effect Yes (210,000) Yes (logo) no 25000 (210,000) (1900) 25000 c. Net income for 2013 amounted to $800,000. Calculate the following (2 pts each, total 4 points): Number of Common shares outstanding. 12/31/13 210,000 DICTE Ending Retained Earnings balance at 12/31/13 944000 85 Problem 1-(25 points) Acme Company was organized on January 1, 2013 and is authorized to issue 1,000,000 shares of $1 par value common stock. The following transactions occurred during 2013 in the order listed. Required: Transaction Analysis (21 pts total) a. Indicate how each transaction affects TOTAL STOCKHOLDERS' EQUITY and RETAINED EARNINGS by writing the dollar amount of the increase or decrease. If there is no effect, write NO EFFECT. Indicate decreases with brackets. b. Indicate whether the transaction will be shown in the FINANCING SECTION of the Statement of Cash Flows Transaction Description Issued 200,000 shares of its own common stock for $5 per share.. Woup. 020 Issued 10,000 shares of its own common stock in exchange for a machine with a fair market value of $50,000. Purchased 20,000 shares of its own stock at $4 per share. The 20,000 shares are held as treasury stock. 90,000 Declared a 51 per share cash dividend on common stock outstanding Paid the dividend declared above. 210,000 Purchased 100 shares of stock in an unrelated company as an investment at a price of $10 per share. 1000 Sold 5,000 shares of its treasury stock at $5 per share. 25,00 Impact on Total Stockholders' Equity Dollar Amount AND Increase (Decrease) OR No Effect 1,000,000 50,000 Impact on Retained Earnings Dollar Amount AND Increase (Decrease) 80,000 7/220,000 Is the transaction reported in the FINANCING Section of the Statement of Cash Flows? Yes or No Or No Effect 1,000,000 Yes 50,000 Yes no no effect no effect Yes (210,000) Yes (logo) no 25000 (210,000) (1900) 25000 c. Net income for 2013 amounted to $800,000. Calculate the following (2 pts each, total 4 points): Number of Common shares outstanding. 12/31/13 210,000 DICTE Ending Retained Earnings balance at 12/31/13 944000