Identifying and Analyzing Financial Statement Effects of Stock Transactions.

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The stockholders' equity of Verrecchia Company at December 31, 2011, follows:

Common stock, $5 par value, 350,000 shares authorized; 130,000 shares issued and outstanding	$650,000
Paid-in capital in excess of par value	600,000
Retained earnings	346,000

During 2012, the following transactions occurred:

Jan. 5 Issued 10,000 shares of common stock for $ 12 cash per share.

Jan. 18 Purchased 4,000 shares of common stock for the treasury at $ 13 cash per share.

Mar. 12 Sold one-fourth of the treasury shares acquired January 18 for $ 17 cash per share.

July 17 Sold 500 shares of the remaining treasury stock for $ 12 cash per share.

Oct. 1 issued 5,000 shares of 8 %, $ 19 par value preferred stock for $ 30 cash per share. This is the first issuance of preferred shares from the 50,000 authorized shares.

(a) Use the financial statement effects template to indicate the effects of each transaction.

Use negative signs with your answers, when appropriate.

(b) Prepare the December 31, 2012, stockholders' equity section of the balance sheet assuming that the company reports net income of $ 72,500 for the year. Use a negative sign with your answer for treasury stock.

Identifying and Analyzing Financial Statement Effects of Stock Transactions The stockholders equity of Verrecchia Company at

(b) Prepare the December 31, 2012, stockholders equity section of the balance sheet assuming that the company reports net in

business accounting

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Answer 1

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Answer #1

A net B C D E F G H I J K L M N O P Balance sheet 1. Income statement Cash Non cash Contributed Earned Transaction asset + as

Working note:

C D E F G H I J K L M N O P Balance sheet Income statement Non cash Contributed Earned Transaction Cash asset + asset = Liabi

95,000 700,000 795,000 Stockholders equity Paid in capital: 8% perferred stock, $19 par value, 50,000 shares authorized, 5,0

Working note:

в =C4+5 Stockholders equity Paid in capital: 8% perferred stock, $19 par value, 50,000 shares authorized, 5,000 shares issue

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Answer 2

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