Identifying and Analyzing Financial Statement Effects of Stock Transactions The stockholders' equity of Gaulin Company at the start of the current year follows: Common stock, $ 5 par value, 350,000 shares authorized; 150,000 shares issued and outstanding $750,000 Paid-in capital in excess of par value 600,000 346,000 Retained earnings During the current year, the following transactions occurred: Jan. 5 Issued 10,000 shares of common stock for $10 cash per share. Jan. 18 Purchased 4,000 shares of common stock for the treasury at $15 cash per share. Mar. 12 Sold one-fourth of the treasury shares acquired January 18 for $19 cash per share. July 17 Sold 500 shares of the remaining treasury stock for $14 cash per share. Oct. 1 Issued 5,000 shares of 8%, $27 par value preferred stock for $34 cash per share. This is the first issuance of preferred shares from the 50,000 authorized shares. (a) Use the financial statement effects template to indicate the effects of each transaction. Use negative signs with your answers, when appropriate. Balance Sheet Transaction Cash Asset + Jan. 5 Jan. 18 Mar. 12 July, 17 Oct. 1 Noncash Contributed Earned Assets - Liabilities + Capital + Capital Paid-in capital 8% Preferred stock, $27 par value, 50,000 shares authorized, 5,000 shares issued and outstanding $ Common stock, $5 par value, 350,000 shares authorized; 160,000 shares issued Additional paid-in capital Paid-in capital in excess of par value-preferred stock Paid-in capital in excess of par value-common stock Paid-in capital from treasury stock Total paid-in capital Retained earnings Income Statement Revenue - Expenses (b) Prepare the current year stockholders' equity section of the balance sheet assuming that the company reports net income of $72,500 for the year. Use a negative sign with your answer for treasury stock. Stockholders' Equity Less: Treasury stock (2,500 shares) at cost (use a negative sign with your answer) Total Stockholders' Equity $ Net Income $
Identifying and Analyzing Financial Statement Effects of Stock Transactions The stockholders' equity of Gaulin Company at the start of the current year follows: Common stock, $ 5 par value, 350,000 shares authorized; 150,000 shares issued and outstanding $750,000 Paid-in capital in excess of par value 600,000 346,000 Retained earnings During the current year, the following transactions occurred: Jan. 5 Issued 10,000 shares of common stock for $10 cash per share. Jan. 18 Purchased 4,000 shares of common stock for the treasury at $15 cash per share. Mar. 12 Sold one-fourth of the treasury shares acquired January 18 for $19 cash per share. July 17 Sold 500 shares of the remaining treasury stock for $14 cash per share. Oct. 1 Issued 5,000 shares of 8%, $27 par value preferred stock for $34 cash per share. This is the first issuance of preferred shares from the 50,000 authorized shares. (a) Use the financial statement effects template to indicate the effects of each transaction. Use negative signs with your answers, when appropriate. Balance Sheet Transaction Cash Asset + Jan. 5 Jan. 18 Mar. 12 July, 17 Oct. 1 Noncash Contributed Earned Assets - Liabilities + Capital + Capital Paid-in capital 8% Preferred stock, $27 par value, 50,000 shares authorized, 5,000 shares issued and outstanding $ Common stock, $5 par value, 350,000 shares authorized; 160,000 shares issued Additional paid-in capital Paid-in capital in excess of par value-preferred stock Paid-in capital in excess of par value-common stock Paid-in capital from treasury stock Total paid-in capital Retained earnings Income Statement Revenue - Expenses (b) Prepare the current year stockholders' equity section of the balance sheet assuming that the company reports net income of $72,500 for the year. Use a negative sign with your answer for treasury stock. Stockholders' Equity Less: Treasury stock (2,500 shares) at cost (use a negative sign with your answer) Total Stockholders' Equity $ Net Income $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:# 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
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