Daejeon Motors Corporation's January 1, 2021 balance sheet contained the shareholders' equity section shown above. The following equity transactions occurred sequentially during 2021 (i.e., transaction i. preceded transaction ii. and transaction ii. preceded transaction iii. and so on): i. Sold an additional 4,000 shares of authorized common stock at $10 per share to a hedge fund. ii. Purchased 800 treasury shares at $11 per share. iii. Declared a 2-for-1 stock split, increased authorized shares to 100,000, and reduced par value of the common stock to $0.50 per share.
Daejeon Motors Corporation's January 1, 2021 balance sheet contained the shareholders' equity section shown above. The following equity transactions occurred sequentially during 2021 (i.e., transaction i. preceded transaction ii. and transaction ii. preceded transaction iii. and so on): i. Sold an additional 4,000 shares of authorized common stock at $10 per share to a hedge fund. ii. Purchased 800 treasury shares at $11 per share. iii. Declared a 2-for-1 stock split, increased authorized shares to 100,000, and reduced par value of the common stock to $0.50 per share.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Daejeon Motors Corporation
Stockholders' Equity
January 1, 2021
Contributed Capital
Common Stock at par
(Par value $1.00. Authorized Shares 50,000; Issues Shares 1,000)
Paid-in Capital in Excess of Par Value, Common
Total Contributed Capital
Treasury Stock at cost 1,000 shares
Retained Earnings
Total Stockholders' Equity
$11,000
69,000
80,000
(10,000)
50,000
_$120,000
Daejeon Motors Corporation's January 1, 2021 balance sheet contained the shareholders' equity section
shown above. The following equity transactions occurred sequentially during 2021 (i.e., transaction i.
preceded transaction ii. and transaction ii. preceded transaction iii. and so on):
i. Sold an additional 4,000 shares of authorized common stock at $10 per share to a hedge fund.
ii. Purchased 800 treasury shares at $11 per share.
iii. Declared a 2-for-1 stock split, increased authorized shares to 100,000, and reduced par value of
the common stock to $0.50 per share.
iv. Declared a 10% stock dividend. The price of BBC stock on this day was $15 a share.
v. Declared and paid a cash dividend of $ 1.50 per share.
vi. Sold 1,000 of the treasury shares acquired in transaction ii. above at $7.50 per share.
vii. Reported net income for the year ended December 31, 2021, of $10,000.
Required: For each of the above transactions, determine the dollar amount and effect on
1. Common Stock at Par.
2. Paid in Excess of Par,
3. Retained Earnings,
4. Treasury Stock.
5. Total Stockholders' Equity,
6. Shares Issued, and
7. Shares Outstanding.
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