Effects of Stockholders Equity Transactions on the Statement of Cash Flows Refer to all of the facts

Question:

Effects of Stockholders’ Equity Transactions on the Statement of Cash Flows Refer to all of the facts in Problem 11-1A.

Peeler Company was incorporated as a new business on January 1, 2010. The corporate charter approved on that date authorized the issuance of 1,000 shares of $100 par, 7% cumulative, nonparticipating preferred stock and 10,000 shares of $5 par common stock. On January 10, Peeler issued for cash 500 shares of preferred stock at $120 per share and 4,000 shares of common stock at $80 per share. On January 20, it issued 1,000 shares of common stock to acquire a building site at a time when the stock was selling for $70 per share.

During 2010, Peeler established an employee benefit plan and acquired 500 shares of common stock at $60 per share as treasury stock for that purpose. Later in 2010, it resold 100 shares of the stock at $65 per share.

On December 31, 2010, Peeler determined its net income for the year to be $40,000. The firm declared the annual cash dividend to preferred stockholders and a cash dividend of $5 per share to the common stockholders. The dividends will be paid in 2011.


Required

Indicate how each transaction affects the cash flow of Kebler Company by preparing the Financing Activities section of the 2010 statement of cash flows. Provide an explanation for the exclusion of any of these transactions from the Financing Activities section of the statement.


Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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