Chapter 10, Problem 10.2BP

Record equity transactions and indicate the effect on the balance sheet equation (LO10–2, 10–3, 10–4, 10–5)

Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2018, 125 shares of preferred stock and 3,000 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2018:

March 1	Issue 3,000 additional shares of common stock for $10 per share.
April 1	Issue 175 additional shares of preferred stock for $40 per share.
June 1	Declare a cash dividend on both common and preferred stock of $0.25 per share to all stockholders of record on June 15.
June 30	Pay the cash dividends declared on June 1.
August 1	Purchase 175 shares of common treasury stock for $7 per share.
October 1	Reissue 125 shares of treasury stock purchased on August 1 for $9 per share.

 Nautical has the following beginning balances in its stockholders’ equity accounts on January 1, 2018: Preferred Stock, $1,250. Common Stock, $3,000, Additional Paid-in Capital, $19,500; and Retained Earnings, $11,500. Net income for the war ended December 31, 2018, is $7,650.

  Required:

  1.    Record each of these transactions.

  2.    Indicate whether each of these transactions would increase (+), decrease (–), or have no effect (NE) on total assets, total liabilities, and total stockholders’ equity by completing the following chart.