The following are selected transactions that may affect stockholders’ equity. 1.   Recorded accrued interest earned on a note receivable. 2.   Declared a cash dividend. 3.   Declared and distributed a stock split. 4.   Approved a retained earnings restriction. 5.   Recorded the expiration of insurance coverage that was previously recorded as prepaid insurance. 6.   Paid the cash dividend declared in item 2 above. 7.   Recorded accrued interest expense on a note payable. 8.   Declared a stock dividend. 9.   Distributed the stock dividend declared in item 8. Instructions In the following table, indicate the effect each of the nine transactions has on the financial statement elements listed. Use the following code: I = Increase, D = Decrease, NE = No effect. Item Assets Liabilities Stockholders’ Equity Paid-in Capital Retained Earnings Net Income 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00

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Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.