Stockholders\' Equity Accounts MJ Company has identified the following items. In
ID: 2422962 • Letter: S
Question
Stockholders' Equity Accounts
MJ Company has identified the following items. Indicate whether each item is included in an account in the Stockholders' Equity category of the balance sheet and identify the account title. Also, indicate whether the item would increase or decrease stockholders' equity.
Stockholders' Equity Accounts
MJ Company has identified the following items. Indicate whether each item is included in an account in the Stockholders' Equity category of the balance sheet and identify the account title. Also, indicate whether the item would increase or decrease stockholders' equity.
Account in Stockholders' Equity Increased/Decreased Equity 1. Preferred stock issued by MJ _________________ _________________ 2. Amount received by MJ in excess of par value when preferred stock was issued _________________ _________________ 3. Dividends in arrears on MJ preferred stock _________________ _________________ 4. Cash dividend declared but unpaid on MJ stock _________________ _________________ 5. Stock dividend declared but unissued by MJ _________________ _________________ 6. Treasury stock _________________ _________________ 7. Amount received in excess of cost when treasury stock is reissued by MJ _________________ _________________ 8. Retained earnings _________________ _________________Explanation / Answer
Solution:
Account in Stockholders' Euity Increased/ decreased Equity 1 Preferred Stock issued by MJ Preferred Stock A/c Increase 2 Amount received by MJ in excess of Par value when preferred stock was issued Additional Paid in capital -Preferred Stock Increase 3 Dividend in Arrears on MJ Preferred Stock Not applicable No effect 4 Cash dividend declared but unpaid on MJ Stock Retained Earnings A/c Decrease 5 Stock dividend declared but unissued by MJ Stock Dividend Distributable A/c No effect 6 Treasury Stock Treasury Stock A/c Decrease 7 Amount received in excess of cost when treasury stock is reissued by MJ Additional Paid in capital -Treasury Stock Increase 8 Retained Earnings Retained Earnings A/c Increase