Answered

At Westonci.ca, we connect you with experts who provide detailed answers to your most pressing questions. Start exploring now! Connect with a community of experts ready to help you find accurate solutions to your questions quickly and efficiently. Explore comprehensive solutions to your questions from a wide range of professionals on our user-friendly platform.

Tom Yuppy, a wealthy investor, paid $20,000 for 1,000 shares of $10 par common stock issued to him by Leuig Corp. A month later, Leuig Corp. issued an additional 2,000 shares of stock to Yuppy for $25 per share.

Required:
Show the effect of the two stock issues on Leuig's books in a horizontal statements model.

Sagot :

Answer:

See the attached excel file for the horizontal statements model.

Explanation:

In the attached excel file, we have:

FA = Financing activity

For event 1:

Cash = $20,000

Common stock = Number of shares * Share price at par = 1,000 * $10 = $10,000

PIC in Excess = Paid in capital in excess = Cash - Common stock = $20,000 - $10,000 = $10,000

For event 2:

Cash = Number of shares issued * Price per share = 2,000 * $2.50 = $50,000

Common stock = Number of shares * Share price at par = 2,000 * $10 = $20,000

PIC in Excess = Cash - Common stock = $50,000 - $20,000 = $30,000

View image amcool

Following are calcultion to the given question:

                                   [tex]\bold{ \text{ TOM YUPPY CO. }}\\\\\ \ \ \ \ \ \ \ \ \ \ \text{ Horizontal Statements Model }\\\\ \text{ Event \ \ \ \ \ \ \ \ \ \ \ \ \ Balance sheet \ \ \ \ \ \ \ \ \ \ \ \ \ Income Statement}[/tex][tex]\text{ Assets=Stockholders' Equity Revenue-Expense=Net Income Statement of Cash Flow}[/tex]

    [tex]Cash+Land=Common Stock+PIC in Excess[/tex]

For point 1:[tex]Common Stock \ \ \ \ \ \ \ 20000 \ \ \ \ + \ \ \ \ \ \ 0 \ \ \ \ \ \ \ 10000\ \ \ \ \ \ \ \ + \ \ \ \ \ \ \ \ \ 10000\ \ \ \ \ \ \ \ 0 \ \ \ \ \ \ \ \ \ \ \ \ \ \ 0\ \ \ \ \ \ \ \ \ \ 0 \ \ \ \ \ \ \ \ 20000\ \ \ \ \ \ \ \ \ \ FA[/tex]

For point 2: [tex]\text{ Issue of additional shares} \ \ \ \ \ \ \ \ \ 50000\ \ \ \ \ \ \ \ \ \ + \ \ \ \ 0 \ \ \ \ \ \ \ \ \ \ 20000\ \ \ \ \ \ \ \ \ + \ \ \ \ \ \ \ \ 30000 \ \ \ \ \ \ \ 0 \ \ \ \ \ \ \ 0 \ \ \ \ \ \ \ \ \ 0\ \ \ \ \ \ \ \ \ 20000\ \ \ \ \ \ \ FA[/tex]

Learn more:

brainly.com/question/14974743

Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. Thank you for visiting Westonci.ca. Stay informed by coming back for more detailed answers.