Consider the following transactions for Lavigne Corp. Assume Lavigne Corp. uses

Question

Consider the following transactions for Lavigne Corp. Assume Lavigne Corp. uses the cost method for any treasury stock transactions. For each of the following transactions indicate the offect of the transaction on 1) Retained earnings (RE), and 2) Total shareholders equity (Total Se Remember that items that effect retained earnings also effect shareholders equity, as retained earning is an equity account. (However, if there is another equity account with an offsetting change, it is possible to have an effect on RE with no effect on total equity) You may use the answer choices more than once or not at all # 1 , Lavigne issues d0clares a 5% stock dividend on common a RE increases, Total SE increases b. RE decreases, Total SE decreases G. No effect on RE, no effect on Total SE - stock. ; 2. Lavigne declares a $2 per cash share dividend t 3, Lavigne pays the dividend in Question 2. RE decreases, no effect on Total SE 4. Lavigne purchases 100 shares of its own stock from shareholders for $1,000. The stock was issued for $300 originally e. No effect on RE, Total SE decreases :5. Lavigne declares a 2-for-1 stock split

Explanation / Answer

journal:

Note:

A movement with in stock holders equity accounts, such as common stock, additional paid in capital and retained earnings will not have any effect on the total of stock holders equity amount.

Q no Option 1 d 2 b 3 c 4 e 5 c

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