Using the Column Headings Provided Below, Show the Effect, If

question 8

Essay

Using the column headings provided below, show the effect, if any, of the transaction on each financial statement category by indicating whether it is an addition (+)or subtraction (-)and by showing the amount in the appropriate column.For the treasury stock column, show the effects, if any, of the transaction on total stockholders' equity.Do not show items that affect net income in the retained earnings column.You should assume that the transactions occurred in the chronological sequence as indicated.
$\begin{array}{l}\text { (1.) Issued } 2,400 \text { shares of } \$ 60 \text { par value preferred stock in exchange for land and } \\\text { an existing building that had appraised values of } \$ 70,000 \text { and } \$ 100,000 \text {, } \\\text { respectively. } \\\text { (2.) Issued } 15,000 \text { shares of } \$ 10 \text { par value common stock for } \$ 24 \text { per share. } \\\text { (3.) Purchased } 2,000 \text { shares of common stock for the treasury at } \$ 25 \text { per share } \\\text { (4.) Sold } 1,200 \text { shares of the treasury stock purchased in transaction } \# 3 \text { for } \$ 30 \text { per } \\\text { share. } \\\text { (5.) Declared a cash dividend of } \$ 1.40 \text { per share on the common stock outstanding, } \\\text { to be paid early next year }\\\text { (6.) Split the common stock } 2 \text {-for-1. }\end{array}$
$$\begin{array} { | c | l | l | l | l | l | l | l | } \hline & \text { Cash } & \begin{array} { c } \text { Other } \\\text { Assets }\end{array} & \text { Liabilities } & \begin{array} { c } \text { Paid-in } \\\text { Capital }\end{array} & \begin{array} { c } \text { Retningd } \\\text { Earnings }\end{array} & \begin{array} { c } \text { Treasury } \\\text { Stock }\end{array} & \begin{array} { c } \text { Net } \\\text { Income }\end{array} \\\hline 1 . & & & & & & & \\\hline 2 . & & & & & & & \\\hline 3 . & & & & & & & \\\hline 4 . & & & & & & & \\\hline 5 . & & & & & & & \\\hline 6 . & & & & & & & \\\hline\end{array}$$

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Definitions:

Bad Debts Expense

Bad debts expense represents the recognition of accounts receivable that are not expected to be collected, impacting a company's financial statements.

Allowance for Doubtful Accounts

A reserve for accounts receivable that a company does not expect to collect in full, acknowledging some customers may not pay their debts.

Allowance for Doubtful Accounts

A contra-asset account used to create an estimated reserve for debts that may not be collected.

Bad Debts Expense

An expense reported on the income statement, representing the estimated amount of credit sales that are not expected to be collected.