Homework Module $8$

Identifying and Analyzing Financial Statement Effects of Stock Transactions

The stockholders' equity of Gaulin Company at the start of the current year follows:

Common stock, $$5$ par value, $350,000$ shares authorized; $150,000$ shares issued and outstanding $$750,000$

Paid$-$in capital in excess of par value

Retained earnings

$600,000$

$346,000$

During the current year, the following transactions occurred:

Jan. $5$ Issued $10,000$ shares of common stock for $$12$ cash per share.

Jan. $18$ Purchased $4,000$ shares of common stock for the treasury at $$14$ cash per share.

Mar. $12$ Sold one$-$fourth of the treasury shares acquired january $18$ for $$17$ cash per share.

July $17$ Sold $500$ shares of the remaining treasury stock for $$13$ cash per share.

Oct. $1$ Issued $5,000$ shares of $8\%,$ $$25$ par value preferred stock for $$35$ cash per share. This is the first issuance of preferred shares from the $50,000$ authorized shares.

$($a$)$ Use the financial statement effects template to indicate the effects of each transaction.

Use negative signs with answers, when appropriate.

$($b$)$ Prepare the current year stockholders' equity section of the balance sheet assuming that the company reports net income of $$72,500$ for the year.

Use a negative sign with your answer for treasury stock.