Many types of transactions may affect stockholders’ equity.
Requirement
1. Identify the effects of the following transactions on total stockholders’ equity. Each transaction is independent.
(a) A 10% stock dividend. Before the dividend, 520,000 shares of $1 par common stock were outstanding; market value was $3 at the time of the dividend.
(b) A 2-for-1 stock split. Prior to the split, 65,000 shares of $4 par common stock were outstanding.
(c) Purchase of 1,000 shares of treasury stock (par value at $0.50) at $3 per share.
(d) Sale of 900 shares of $0.50 par treasury stock for $5 per share. Cost of the treasury stock was $3 per share.