Based on the Following Summary of Shareholders' Equity Accounts, AnswerA What Is Net Income During Year 2? B

The Answer is a. $500,000 ($2,500,000 - $2,000,000) b. 50,000 (($1,250.000 - $1,000,000) / $5) c. $12 (($224,000 - $200,000) / 2,000) d. $15 ($2,000,000 - $1,500,000) / 50,000 = $10 + $5 par e. Cost is $150,000 greater than market at December 31, Year 2 or $50,000 change from Year 1 to Year 2.

Based on the Following Summary of Shareholders' Equity Accounts, AnswerA What Is Net Income During Year 2? B

The Answer is a. $500,000 ($2,500,000 - $2,000,000) b. 50,000 (($1,250.000 - $1,000,000) / $5) c. $12 (($224,000 - $200,000) / 2,000) d. $15 ($2,000,000 - $1,500,000) / 50,000 = $10 + $5 par e. Cost is $150,000 greater than market at December 31, Year 2 or $50,000 change from Year 1 to Year 2.

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Based on the Following Summary of Shareholders' Equity Accounts, Answer

question 1

Essay

Based on the following summary of shareholders' equity accounts, answer the following questions.No dividends were paid during the Year 1 and Year 2.
$\begin{array}{lll}& \text {December 31 , Year 1 }& \text {December 31, Year 2 }\\\text { Common stock, } \$ 5 \text { par value } & \$ 1,000,000 & \$ 1,250,000 \\\text { Additional paid-in capital } & 1,500,000 & 2,000,000 \\\text { Net unrealized loss on investment } & &\\\text { in marketable equity securities } & (100,000) & (150,000) \\\text { Retained earnings } & 2,000,000 & 2,500,000 \\\text { Less: Cost of treasury shares } & (200.000) & (224,000)\\\text { Total shareholders' equity } & \$ 4.200 .000 & \$ 5.376 .000\end{array}$
a. What is net income during Year 2?
b. How many additional common shares were issued in Year 2?
c. What was the cost per share of the treasury stock acquired during Year 2? 2,000 additional shares were acquired during the year.
d. What price was paid for the additional common shares issued in Year 2?
e. What happened to the portfolio of long-term marketable equity securities?

Grasp the concepts of relevance and faithful representation in financial reporting.

Understand the characteristics of accounting information and the importance of consistency in application.

Describe the assumptions underlying financial accounting, including the economic entity, going concern, and the time period assumption.

Understand the principles of revenue recognition and expense recognition.

Definitions:

Equilibrium Price

The price at which the quantity of a good demanded by consumers balances the quantity supplied by producers, resulting in a stable market condition.

Suppliers

Businesses or individuals that provide goods or services to another entity, often in exchange for monetary compensation.

Surpluses

Occurs when the quantity supplied of a product exceeds the quantity demanded, often leading to a drop in prices.

Price Up

An increase in the cost of goods or services in the market.