LO 2 Exercise 11-4A Effect of issuing common stock on the balance sheet Newly formed Home Medical Corporation has 100,000 shares of $5 par common stock autho- rized. On March 1, 2011, Home Medical issued 10,000 shares of the stock for $12 per share. On May 2 the company issued an additional 20,000 shares for $20 per share. Home Medical was not affected by other events during 2011. Required a. Record the transactions in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event. Assets Liab. + Cash = Equity Com. Stk. + PIC in Excess Rev. Exp. = Net Inc. Proprietorships, Partnerships, and Corporations b. Determine the amount Home Medical would report for common stock on the December 31, 2011, balance sheet. c. Determine the amount Home Medical would report for paid-in capital in excess of par. d. What is the total amount of capital contributed by the owners? - e. What amount of total assets would Home Medical report on the December 31, 2011, balance sheet? f. Prepare journal entries to record the March 1 and May 2 transactions. Cash Flow 595
LO 2 Exercise 11-4A Effect of issuing common stock on the balance sheet Newly formed Home Medical Corporation has 100,000 shares of $5 par common stock autho- rized. On March 1, 2011, Home Medical issued 10,000 shares of the stock for $12 per share. On May 2 the company issued an additional 20,000 shares for $20 per share. Home Medical was not affected by other events during 2011. Required a. Record the transactions in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event. Assets Liab. + Cash = Equity Com. Stk. + PIC in Excess Rev. Exp. = Net Inc. Proprietorships, Partnerships, and Corporations b. Determine the amount Home Medical would report for common stock on the December 31, 2011, balance sheet. c. Determine the amount Home Medical would report for paid-in capital in excess of par. d. What is the total amount of capital contributed by the owners? - e. What amount of total assets would Home Medical report on the December 31, 2011, balance sheet? f. Prepare journal entries to record the March 1 and May 2 transactions. Cash Flow 595
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:LO 2
Exercise 11-4A Effect of issuing common stock on the balance sheet
Newly formed Home Medical Corporation has 100,000 shares of $5 par common stock autho-
rized. On March 1, 2011, Home Medical issued 10,000 shares of the stock for $12 per share. On
May 2 the company issued an additional 20,000 shares for $20 per share. Home Medical was not
affected by other events during 2011.
Required
a. Record the transactions in a horizontal statements model like the following one. In the Cash
Flow column, indicate whether the item is an operating activity (OA), investing activity (IA),
or financing activity (FA). Use NA to indicate that an element was not affected by the event.
Assets Liab. +
Cash =
Equity
Com. Stk. + PIC in Excess
Rev. Exp. = Net Inc.
Proprietorships, Partnerships, and Corporations
b. Determine the amount Home Medical would report for common stock on the December 31,
2011, balance sheet.
c. Determine the amount Home Medical would report for paid-in capital in excess of par.
d. What is the total amount of capital contributed by the owners?
-
e. What amount of total assets would Home Medical report on the December 31, 2011, balance
sheet?
f. Prepare journal entries to record the March 1 and May 2 transactions.
Cash Flow
595
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