Tell whether each of the following actions will increase, decrease, or have no effect on total assets, total liabilities, and total stockholders equity :
(1) Declaration of a stock dividend
(2) Declaration of a cash dividend
(3) stock split
(4) Restriction of retained earnings
(5) purchase of treasury stock
- AnchelLv 71 十年前最愛解答
(1) Dr: retained earnings Cr: Common Stock, Paid-in capital in excess of par (if any). It affects only stockholders' equity account, but no effect on total stockholders equity. There is also no effect on total assets and liabilities as none of the assets and liabilities accounts are dr/cr.
(2) Dr: Retained earnings Cr: Divident payable.
No effect on total assets.
Increase total liabilities.
Reduce total stockholders equity.
(3) No effect on those three as the total amount of stock issued is remain the same before and after the stock split. Only the number and the value per share is different, but the total amount of share issued remain the same.
(4) If company appropriate part of retained profit as a restrictions on retained earnings, it will reduce retained earnings and total stockholders equity. However, most of the companies report such restrictions on the notes to the financial statement, instead of appropriate the retained earnings. If notes are made, there is no effect on those three.
(5) Dr: Treasury Stock-Common Cr: Cash
Reduce total stockholders equity as treasury stock is contra equity.
Reduce total assets as cash is paid to buy them.
No effect on total liabilities.
- PKW ( PJR )Lv 71 十年前
A= Total Assets, L=Total Liabilties E = Total Equity
1. Upon declaration passed by the Board of Directors, there is a reduction in Reserves Stockholders' Equity (-E) and an increase in Total Liabilities (+L) Dividend Payable. Upon conversion of its to Common Stock ( Dr. Dividend Payable (-L) Cr. Common Stock(+E)
2. Upon declaration passed by the Board of Directors, there is a reduction in Reserves(-E) and an increase in Total Liabilities(+L) Dividend Payable. Upon payment of the cash dividend ( Dr. Dividend Payable (-L) Cr. Bank(-A))
3. No effect
4. No effect as there is no action could be taken
5. No change as it is only Dr. Treasury Stock (+A) Cr. Bank (-A)
2007-05-02 19:23:40 補充：
問題已經被系統自動移除，請回上一頁。 This is the usual feedback at the end as the question is raised by a 匿名. It will then be pointless for a people to give any answer to the question. I have a lot of these experience. Do you think it is better if you use an ID instead of a 匿名. Be open and fair !