The Stockholders' Equity category of Little Joe's balance sheet on January 1, 2012, appeared as follows: Common
Question:
The Stockholders' Equity category of Little Joe's balance sheet on January 1, 2012, appeared as follows:
Common stock, $5 par, 40,000 shares issued and outstanding..........$200,000
Additional paid-in capital........................................................90,000
Retained earnings...............................................................100,000
Total stockholders' equity....................................................$390,000
The following transactions occurred during 2012:
a. Reacquired 5,000 shares of common stock at $20 per share on February 1.
b. Reacquired 1,200 shares of common stock at $13 per share on March 1.
Required
1. Identify and analyze the effect of each transaction.
2. Assume that the treasury stock was reissued on October 1 at $12 per share. Did the company benefit from the treasury stock reissuance? Where is the ''gain'' or ''loss'' presented on the financial statements?
3. What effect did the two transactions to purchase treasury stock and the later reissuance of that stock have on the Stockholders' Equity section of the balance sheet?
Common StockCommon 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... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
1 a The effect of the purchase of the treasury stock on February 1 can be identified and analyzed as ...View the full answer
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1111534912
8th edition
Authors: Gary A. Porter, Curtis L. Norton
