Question

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on retained earnings for each of the listed transactions.

____ A net loss for the year.

____ A stock split effected in the form of a stock dividend.

____ A stock split in which the par per share is reduced (but not effected in the form of a stock dividend).

____ Declaration of a 5% stock dividend.

____ Declaration of a cash dividend.

____ Issue stock for noncash assets.

____ Payment of previously declared cash dividend.

____ Retirement of common stock at a cost greater than the original issue price.

____ Retirement of common stock at a cost less than the original issue price.

____ Resale of treasury stock for less than carrying value assuming no previous treasury stock sales.

Answer 1

Answer and Explanation:

A net loss for the year. (Increase) I

A stock split effected in the form of a stock dividend. (decrease) D

A stock split in which the par per share is reduced (but not effected in the form of a stock dividend). (No effect) N

Declaration of a 5% stock dividend. (Decrease) D

Declaration of a cash dividend. (Decrease) D

Issue stock for noncash assets. (No effect) N

Payment of previously declared cash dividend. (No effect) N

Retirement of common stock at a cost greater than the original issue price. (Decrease) D

Retirement of common stock at a cost less than the original issue price. (No effect) N

Resale of treasury stock for less than carrying value assuming no previous treasury stock sales. (Decrease) D