Exercise 15-7

Joe Dumars Company has outstanding 40,000 shares of $5 par common stock which had been issued at $30 per share. Joe Dumars then entered into the following transactions.

1.Purchased 5,000 treasury shares at $45 per share.

2.Resold 2,000 of the treasury shares at $49 per share.

3.Resold 500 of the treasury shares at $40 per share.

Indicate the effect each of the three transactions has on the financial statement categories listed in the table below, assuming Joe Dumars Company uses the cost method.

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Exercise 15-7 Joe Dumars Company has outstanding 40,000 shares of $5 par common stock which had been issued at $30 per share. Joe Dumars then entered into the following transactions. 1 . Purchased 5,000 treasury shares at $45 per share. 2 . Resold 2,000 of the treasury shares at $49 per share. 3 . Resold 500 of the treasury shares at $40 per share. Indicate the effect each of the three transactions has on the financial statement categories listed in the table below, assuming Joe Dumars Company uses the cost method. # 1. 2. 3. Assets Liabilities Stockholders' Equity Paid-in Capital Retained Earnings Net Income