The following are possible transactions that affect shareholders equity: 1. A company issues common stock above par

Question:

The following are possible transactions that affect shareholder’s equity:

1. A company issues common stock above par value for cash.

2. A company declares a 3-for-1 stock split.

3. A company repurchases 10,000 shares of its own common stock in exchange for cash.

4. A company declares and issues a stock dividend. Assume that the fair market value of the stock is greater than the par value.

5. A company reissues 1,000 share of treasury stock for $75 per share. The stock was acquired for $60 per share.

6. A company pays a cash dividend that had been declared fifteen days earlier.

7. A company generates net income of $250,000.

For each transaction above, indicate the following:

(a) The accounts within the shareholder’s equity section that would be affected.

(b) Whether these accounts would be increased or decreased.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...