effects of stockholders equity transactions on the balance shee 245986

Effects of Stockholders’ Equity Transactions on the Balance Sheet The following transactions occurred at Horton Inc. during its first year of operation:

a. Issued 100,000 shares of common stock at $5 each; 1,000,000 shares are authorized at $1 par value.

b. Issued 10,000 shares of common stock for a building and land. The building was appraised for $20,000, but the value of the land is undeterminable. The stock is selling for $10 on the open market.

c. Purchased 1,000 shares of its own common stock on the open market for $16 per share.

d. Declared a dividend of $0.10 per share on outstanding common stock. The dividend is to be paid after the end of the first year of operations. Market value of the stock is $26.

e. Declared a 2-for-1 stock split. The market value of the stock was $37 before the stock split.

f. Reported $180,000 of income for the year.

Required

1. Indicate each transaction’s effect on the assets, liabilities, and stockholders’ equity of Horton Inc.

2. Prepare the Stockholders’ Equity section of the balance sheet.

3. Write a paragraph that explains the number of shares of stock issued and outstanding at the end of the year.

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