# Identifying and Analyzing Financial Statement Effects of Stock Transactions## Stockholders' Equity of Gaulin Company### Current Year Overview:- **Common Stock, $5 Par Value:** - Authorized: 350,000 shares - Issued and Outstanding: 150,000 shares - Value: $750,000- **Paid-in Capital in Excess of Par Value:** $600,000- **Retained Earnings:** $346,000---### Transactions During the Current Year:1. **January 5:** Issued 10,000 shares of common stock at $10 per share.2. **January 18:** Purchased 4,000 shares of common stock for the treasury at $15 per share.3. **March 12:** Sold one-fourth of the treasury shares acquired on January 18 for $19 per share.4. **July 17:** Sold 500 shares of the remaining treasury stock for $14 per share.5. **October 1:** Issued 5,000 shares of 8% preferred stock at $27 per share.### Financial Statement Effects:- **Template for Transaction Analysis:** Use the financial statement effects template to analyze the impact of these transactions. Enter negative signs where appropriate. **Balance Sheet Template:**| Transaction | Cash Asset | Noncash Assets | Liabilities | Contributed Capital | Earned Capital ||-------------|------------|----------------|-------------|---------------------|----------------|| Jan. 5 | | | | | || Jan. 18 | | | | | || Mar. 12 | | | | | || July 17 | | | | | || Oct. 1 | | | | | |**Income Statement Template:**| Revenue | Expenses | Net Income ||---------|----------|------------|| | | |---### Stockholders' Equity Section Preparation:- **Assumption:** The company reports a net income of $72,500 for the year.- **Note:** Use a negative sign for treasury stock.**Stockholders' Equity Table:**| Category | ||----------|--------------------------------|| Paid-in Capital: | | 8% Preferred Stock, $27 Par Value: | 5,000

As per dual concept of accounting, every transaction has dual impact on the books of accounts.The accounting equation records all the assets, liabilities and stockholders' equity related transactions.Assets have debit balance while liabilities and equity have credit balance.Balance sheetCash asset+Noncash asset = Liabilities+Contri. Capital+Earned capital=10,000*10+0 = 0+=10,000*10+0=-4,000*15+0 = 0+=-4,000*15+0=1,000*19+0 = 0+=1,000*19+0=500*14+0 = 0+=500*14+0=5,000*34+0 = 0+=5,000*34+0ParticularsAmountAmountPaid in capital 8% Preferred stock, $27 par value, 50000 shares authorized, 5000 shares issued and outstanding=5,000*27 Common stock, $5 par value, 350000 shares authorized, 160000 shares issued=160,000*5=135,000+800,000Additional paid in capital Paid in capital in excess of par value-Preferred stock=5,000*(34-27) Paid in capital in excess of par value-common stock=600,000+10,000*(10-5) Paid in capital from treasury stock=1,000*(19-15)-500*(15-14)=35,000+650,000+3,500Total paid in capital =935,000+688,500Retained earnings ($346,000+$72,500) =346,000+72,500Less: Treasury stock (2500 shares) at cost =-2500*15Total stockholders equity =418,500+1,623,500-37,500(a) Balance sheetIncome statementTransactionCash asset+Noncash asset = Liabilities+Contri. Capital+Earned capitalRevenues-Expenses =Net incomeJan-05$100,000+$0 = $0+$100,000+$0$0-$0 =$0Jan-18-$60,000+$0 = $0+-$60,000+$0$0-$0 =$0Mar-12$19,000+$0 = $0+$19,000+$0$0-$0 =$0Jul-17$7,000+$0 = $0+$7,000+$0$0-$0 =$0Oct-01$170,000+$0 = $0+$170,000+$0$0-$0 =$0(b) Stockholder's equity ParticularsAmountAmountPaid in capital 8% Preferred stock, $27 par value, 50,000 shares authorized, 5,000 shares issued and outstanding$135,000 Common stock, $5 par value, 350000 shares authorized, 160,000 shares issued$800,000$935,000Additional paid in capital Paid in capital in excess of par value-Preferred stock$35,000 Paid in capital in excess of par value-common stock$650,000 Paid in capital from treasury stock$3,500$688,500Total paid in capital $1,623,500Retained earnings ($346,000+$72,500) $418,500Less: Treasury stock (2,500 shares) at cost -$37,500Total stockholders equity $2,004,500