Chapter 15, Problem 1P

To determine

Equity transactions and statement: Common stock represents equity ownership in a corporation. Common stock holders bear a higher amount of risk of loss and are also entitled to higher benefits in the company’s profits and assets. Common stock can be issued at par or at premium or discount. Common shares can be issued not only for cash but also in exchange of another asset, for example, land .Sometimes companies buy back or require their own shares. These stocks are either retired or held for reissue. Shares held for reissue are called treasury stock. Treasury stocks are not held as assets but are same as unissued capital. Treasury stocks can be reissued at different rates at different points of time. The sale can be at cost or above or below cost.

To prepare: To prepare journal entries and equity section of balance sheet.