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. 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. # Assets Liabilities Stockholders’ Equity Paid-in Capital Retained Earnings Net Income 1. select an effect on a financial statement category IncreaseNo effectDecrease select an effect on a financial statement category IncreaseNo effectDecrease select an effect on a financial statement category DecreaseIncreaseNo effect select an effect on a financial statement category DecreaseNo effectIncrease select an effect on a financial statement category IncreaseDecreaseNo effect select an effect on a financial statement category DecreaseIncreaseNo effect 2. select an effect on a financial statement category DecreaseIncreaseNo effect select an effect on a financial statement category IncreaseDecreaseNo effect select an effect on a financial statement category No effectDecreaseIncrease select an effect on a financial statement category No effectIncreaseDecrease select an effect on a financial statement category IncreaseNo effectDecrease select an effect on a financial statement category DecreaseIncreaseNo effect 3. select an effect on a financial statement category No effectDecreaseIncrease select an effect on a financial statement category DecreaseIncreaseNo effect select an effect on a financial statement category IncreaseNo effectDecrease select an effect on a financial statement category No effectDecreaseIncrease select an effect on a financial statement category DecreaseIncreaseNo effect

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. 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. # Assets Liabilities Stockholders’ Equity Paid-in Capital Retained Earnings Net Income 1. select an effect on a financial statement category IncreaseNo effectDecrease select an effect on a financial statement category IncreaseNo effectDecrease select an effect on a financial statement category DecreaseIncreaseNo effect select an effect on a financial statement category DecreaseNo effectIncrease select an effect on a financial statement category IncreaseDecreaseNo effect select an effect on a financial statement category DecreaseIncreaseNo effect 2. select an effect on a financial statement category DecreaseIncreaseNo effect select an effect on a financial statement category IncreaseDecreaseNo effect select an effect on a financial statement category No effectDecreaseIncrease select an effect on a financial statement category No effectIncreaseDecrease select an effect on a financial statement category IncreaseNo effectDecrease select an effect on a financial statement category DecreaseIncreaseNo effect 3. select an effect on a financial statement category No effectDecreaseIncrease select an effect on a financial statement category DecreaseIncreaseNo effect select an effect on a financial statement category IncreaseNo effectDecrease select an effect on a financial statement category No effectDecreaseIncrease select an effect on a financial statement category DecreaseIncreaseNo effect

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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.

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.

#	Assets	Liabilities	Stockholders’ Equity	Paid-in Capital	Retained Earnings	Net Income
1.	select an effect on a financial statement category IncreaseNo effectDecrease	select an effect on a financial statement category IncreaseNo effectDecrease	select an effect on a financial statement category DecreaseIncreaseNo effect	select an effect on a financial statement category DecreaseNo effectIncrease	select an effect on a financial statement category IncreaseDecreaseNo effect	select an effect on a financial statement category DecreaseIncreaseNo effect
2.	select an effect on a financial statement category DecreaseIncreaseNo effect	select an effect on a financial statement category IncreaseDecreaseNo effect	select an effect on a financial statement category No effectDecreaseIncrease	select an effect on a financial statement category No effectIncreaseDecrease	select an effect on a financial statement category IncreaseNo effectDecrease	select an effect on a financial statement category DecreaseIncreaseNo effect
3.	select an effect on a financial statement category No effectDecreaseIncrease	select an effect on a financial statement category DecreaseIncreaseNo effect	select an effect on a financial statement category IncreaseNo effectDecrease	select an effect on a financial statement category No effectDecreaseIncrease	select an effect on a financial statement category DecreaseIncreaseNo effect	select an effect on a financial statement category DecreaseIncreaseNo effect

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