Question

Assume ABC Cupcakes of Montana, Inc., completed the following transactions during 2012, the company’s 10th year of operations:

Feb 3 Issued 10,000 shares of common stock ($3.00 par) for cash of $280,000.Mar 19 Purchased 2,700 shares of the company’s own common stock at $24 per share. Apr 24 Sold 1,400 shares of treasury stock for $26 per share.Aug 15 Declared a cash dividend on the 16,000 shares of $0.50 no-par preferred stock.Sep 1 Paid the cash dividends. Nov 22 Distributed a 20\begin{matrix} \text{Feb 3 } & \text{Issued 10,000 shares of common stock (\$3.00 par) for cash of \$280,000.}\\ \text{Mar 19 } & \text{Purchased 2,700 shares of the company’s own common stock at \$24 per share. }\\ \text{Apr 24 } & \text{Sold 1,400 shares of treasury stock for \$26 per share.}\\ \text{Aug 15 } & \text{Declared a cash dividend on the 16,000 shares of \$0.50 no-par preferred stock.}\\ \text{Sep 1 } & \text{Paid the cash dividends. }\\ \text{Nov 22 } & \text{Distributed a 20\\% stock dividend on the 94,000 shares of \$3.00 par common stock outstanding. The market value of the common stock was \$25 per share. }\\ \end{matrix}

Analyze each transaction in terms of its effect on the accounting equation of ABC Cupcakes of Montana, Inc.

Solution

Verified
Answered 1 year ago
Answered 1 year ago
Step 1
1 of 7

In this problem, we are tasked to identify the effects of each transactions involving dividends and treasury stocks using the accounting equation which is as follows:

Assets = Liabilities + Equity

You should also note that the normal balance of an asset is a debit while the liabilities and the equity are credit.

Create an account to view solutions

Create an account to view solutions

Recommended textbook solutions

Glencoe Accounting: First Year Course 1st Edition by Glencoe McGraw-Hill

Glencoe Accounting: First Year Course

1st EditionISBN: 9780078688294Glencoe McGraw-Hill
548 solutions
Financial Accounting 9th Edition by Charles T. Horngren, Walter T Harrison, Walter T. Harrison Jr.

Financial Accounting

9th EditionISBN: 9780132751124 (13 more)Charles T. Horngren, Walter T Harrison, Walter T. Harrison Jr.
1,286 solutions
Financial Accounting 4th Edition by Don Herrmann, J. David Spiceland, Wayne Thomas

Financial Accounting

4th EditionISBN: 9781259730948 (3 more)Don Herrmann, J. David Spiceland, Wayne Thomas
1,097 solutions
Century 21 Accounting: General Journal 11th Edition by Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman

Century 21 Accounting: General Journal

11th EditionISBN: 9781337623124Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman
1,012 solutions

More related questions

1/4

1/7