determining financial statement effects of several transactions 242732

Determining Financial Statement Effects of Several Transactions

Nike, Inc., with headquarters in Beaverton, Oregon, is one of the world’s leading manufacturers of athletic shoes and sports apparel. The following activities occurred during a recent year. The amounts are rounded to millions of dollars.

a. Purchased additional buildings for $212 and equipment for $30.4; paid $43.2 in cash and signed a long-term note for the rest.

b. Issued $186.6 in additional stock for cash.

c. Declared $121.4 in dividends to be paid in the following year.

d. Purchased additional short-term investments for $2,908.7 cash.

e. Several Nike investors sold their own stock to other investors on the stock exchange for $53.

f. Sold $2,390 in short-term investments for cash.

Required:

1. For each of the events (a) through (f), perform transaction analysis and indicate the account, amount, and direction of the effect on the accounting equation. Check that the accounting equation remains in balance after each transaction. Use the following headings:

Event Assets = Liabilities + Stockholders’ Equity

2. Explain your response to event (e).

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