Joe Dumars Company has outstanding 40,000 shares of $5 par common stock which had been issued at $30 per share. Joe Dumars then entered into the following transactions. 1.   Purchased 5,000 treasury shares at $45 per share. 2.   Resold 2,000 of the treasury shares at $49 per share. 3.   Resold 500 of the treasury shares at $40 per share. Instructions Use the following code to indicate the effect each of the three transactions has on the financial statement categories listed in the table below, assuming Joe Dumars Company uses the cost method (I = Increase; D = Decrease; NE = No effect). # Assets Liabilities Stockholders’ Equity Paid-in Capital Retained Earnings Net Income 1 00 00 00 00 00 00 2 00 00 00 00 00 00 3 00 00 00 00

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Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.