Ownership interests in a corporation are reported both in the balance sheet under shareholders' equity and in the statement of shareholders' equity.

a. List the principal transactions and events reducing the amount of retained earnings. (Do not include appropriations of retained earnings.)
b. The shareholders' equity section of the balance sheet makes a distinction between contributed capital and retained earnings. Discuss why this distinction is important.
c. There is frequently a difference between the purchase price and sale price of treasury stock. Yet practitioners agree that a corporation's purchase or sale of its own stock cannot result in a profit or loss to the corporation. Explain why corporations do not recognize the difference between the purchase and sale price of treasury stock as a profit or loss.

  • CreatedJanuary 22, 2015
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