Question

Describe how the following transactions affect the balance sheet, income statement, and statement of cash flows of Askins, Inc.

You should specify the name of the account / accounts in the balance sheet that is / are affected by the transaction as well as the magnitude of change / changes in the account / accounts. Also, specify the magnitude of changes in both total assets,total liabilities and total equity.

For the income statement effect, provide the dollar amount and the category (i.e. revenue of expense). For the cash flow statement effects, you need to provide the dollar amount as well as the category of cash flow (i.e. operating/investing/financing activity)

a) On 2/1/XXX1, Askins purchased for cash, in the open market, 1,000 shares of its own common stock at $40 per share.
b) On 7/1/XXX1, 200 of the shares purchased on 2/1/XXX1 were sold at $43 per share.

c) On 8/1/XXX1, $0.25 per share cash dividend was declared by the board of directors and the dividends are payable on 8/31/XXX1. There are 10,000 shares outstanding for Askins, Inc. on this date (You need to provide the answer only for the transaction on 8/1/XXX1)

Answer 1

	Ref	Date	Account	Account	Account	Total Assets	Total Liabilities	Total Equity	REMARK
	a)	2/1/XXX1	Cash	Treasury Stock
		Magnitude	($40,000)	$40,000		($40,000)		($40,000)	Cash decreases by (1000*40),Equity decreasesby $40000
	b)	7/1/XXX1	Cash	Treasury Stock	Additional paid in capital -treasury stock				(Cash increased by 200*43), Treasury stock decreased by (40*200), Additional paid in capital increased200*(43-40)
		Magnitude	$8,600	($8,000)	$600	$8,600		$8,600
	c)	8/1/XXX1	Dividend Payable	Retained Earnings					Dividendpayable liability increased by (10000*0.25) Retained Earnings decreased by $2500
		Magnitude	$2,500	-$2,500			$2,500	-$2,500