Question

Newly formed Electronics Services Corporation has 100,000 shares of $10 par common stock authorized. On March 1, 2014, Electronics Services issued 20,000 shares of the stock for $12 per share. On May 2 the company issued an additional 30,000 shares for $15 per share. Electronics Services was not affected by other events during 2014. Required a. Record the transactions in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). Use NA to indicate that an element was not affected by the event. (Enter any decrease

Answer 1

Record on horizontal statements

Assets = Liabilities + Equity

cash 240,000 = common stock 200,000 additional paid-in 40,000

cash 450,000 = common stock 300,000 addtional paid-in 150,000

issuance of shares March 1st,2014: Financing Activity

May 2nd additional shares issued:

Also Financing activity.

Step-by-step explanation:

March 1st

20,000 x 12 = 240,000 cash

par value 20,000 x 10 = 200,000

additional paid-in: 240,000 - 200,000 = 40,000

May 2nd

30,000 x 15 = 450,000

par value 30,000 x 10 = 300,000

additional paid-in 450,000 - 300,000 = 150,000

Cash flow explanation:

Financing activity. as the company obtain funds from third parties and assume an obligation in the future (it transfer ownership to the stockholders)