Question

account. ember 31, 2015. Uses howing your computer Instructions a. Prepare in general journal form the entries to record the above transaction b. Prepare the stockholders' equity section of the balance sheet at Decembe format illustrated in Exhibit 12-6. Include a supporting schedule showing of retained earnings at that date. c. Compute the maximum cash dividend per share that legally could be decla ber 31, 2015, without impairing the paid-in capital of Greene, Inc. (Hint: retained earnings for dividends is restricted by the cost of treasury stock owne ould be declared at Deum (Hint: The availability isted below are five events Hot Water, Inc., manufactures a variety of dry cleaning equipment. Listed below are that occurred during the current year: 1. Declared a $5 per share cash dividend. 2. Paid the cash dividend. 3. Purchased 1,000 shares of treasury stock for $37 per share. 4. Reissued 600 shares of the treasury stock at a price of $36 per share. 5. Declared a 5 percent stock dividend. Instructions a. Indicate the effects of each of these events on the financial measurements listed in the column headings listed below. Use the following code letters: I for increase, D for de and NE for no effect. Current Assets Stockholders' Equity Net Income Net Cash Flow (from any sourc Event

Answer 1

a)
Event	Current Assets	Stockholders' Equity	Net Income	Net Cash Flows (from any source)	Supporting Explanations
1)	NE	NE	NE	NE	When cash dividends are declared, retained earnings will be decreased due to Dividend Expense and Current Liabilities will be increased with same amount but no impact on assets, stockholders' equity, net income and net cash flows.
2)	D	NE	NE	D	When cash dividends are paid, cash account from current assets will be decreased with same amount and current liabilities will be decreased with same amount and also, the net cash flows will be decreased with same amount but there is no impact on assets, stockolders equity and net income.
3)	D	D	NE	D	When treasury shared are purchased, the stockholders' account is decreases with same amount as shares gets decreased and also the cash is paid so it will be decreased along with net cash flows.
4)	I	I	NE	I	When treasury shared are reissued, the stockholders' account is increases with same amount as shares gets increased and also the cash is received so it will be increased along with net cash flows.
5)	NE	NE	NE	NE	When stock dividendss are declared, retained earnings account will be decreased due to Dividends Expense and dividends distributable account is increased but there is no impact on assets, stockholders' equity, net income and net cash flows at the time of declaration. At the time of payment of stock dividends, the dividends distributable account is added to stockholders', thus, it increases at the time of issue of stock dividends.