Question
Stock Issuance Utep Enterprises had the following transactions during 2017, its first year of business. Required: 1. Identify and analyze the effect of each transaction.
Stock Issuance
Utep Enterprises had the following transactions during 2017, its first year of business.
Required:
1. Identify and analyze the effect of each transaction.
a. Issued 5,400 shares of $5 par common stock for cash at $15 per share.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
| Balance Sheet | Income Statement | ||||||||||||||
| Stockholders' | Net | ||||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||||||
b. Issued 6,200 shares of common stock on May 1 to acquire a factory building from Barkley Company. Barkley had acquired the building in 2013 at a price of $150,000. Utep estimated that the building was worth $175,000 on May 1, 2017.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
| Balance Sheet | Income Statement | ||||||||||||||
| Stockholders' | Net | ||||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||||||
c. Issued 1,100 shares of stock on June 1 to acquire a patent. The accountant has been unable to estimate the value of the patent but has determined that Utep's common stock was selling at $25 per share on June 1.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
| Balance Sheet | Income Statement | ||||||||||||||
| Stockholders' | Net | ||||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||||||
2. Determine the balance sheet amounts for common stock and additional paid-in capital.
| Common stock | $ |
| Additional paid-in capital | $ |
| Total contributed capital | $ |
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Using Financial Accounting Information The Alternative to Debits and Credits
Authors: Gary A. Porter, Curtis L. Norton
10th edition
978-1337491471
