Falcon Incorporated has the following transactions with Wildcat Corporation. Transactions 1. Falcon purchases common stock of Wildcat.
Question:
Falcon Incorporated has the following transactions with Wildcat Corporation.
Transactions
1. Falcon purchases common stock of Wildcat.
2. Falcon borrows from Wildcat by signing a note.
3. Wildcat pays dividends to Falcon.
4. Falcon provides services to Wildcat.
5. Falcon pays interest to Wildcat on borrowing.
Falcon’s Related Account
Investment
Notes payable
Dividend revenue
Service revenue
Interest expense
Required:
1. For each transaction, indicate whether Falcon would classify the related account as an (a) asset, (b) liability, or (c) stockholders’ equity to be reported in the balance sheet; a (d) revenue or (e) expense to be reported in the income statement; or an (f) dividend to be reported in the statement of stockholders’ equity.
2. Classify the type of activity as financing, investing, or operating.
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...
Step by Step Answer:
Transaction Account Activity 1 Falcon purchases common stock of W...View the full answer
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
