Tom Yuppy, a wealthy investor, paid $49,920 for 1,280 shares of $10 par common stock issued to him by Leuig Corp. A month later,Leuig Corp. issued an additional 2,560 shares of stock to Yuppy for $39 per share.RequiredShow the effect of the two stock issues on Leuig's books in a horizontal statements model. In the Cash Flow column, indicate whetherthe item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element was not affected by the event, leavethe cell blank.LEUIG CORP.Horizontal Statements ModelBalance SheetIncome StatementStatement of CashAssetsStockholders' EquityRevenueExpense= Net IncomeFlowEventCommonPIC inCashLandStockExcess1- Common stock2- Issue of additional shares

Answered: Tom Yuppy, a wealthy investor, paid…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 9P

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Tom Yuppy, a wealthy investor, paid $49,920 for 1,280 shares of $10 par common stock issued to him by Leuig Corp. A month later,
Leuig Corp. issued an additional 2,560 shares of stock to Yuppy for $39 per share.
Required
Show the effect of the two stock issues on Leuig's books in a horizontal statements model. In the Cash Flow column, indicate whether
the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element was not affected by the event, leave
the cell blank.
LEUIG CORP.
Horizontal Statements Model
Balance Sheet
Income Statement
Statement of Cash
Assets
Stockholders' Equity
Revenue
Expense
= Net Income
Flow
Event
Common
PIC in
Cash
Land
Stock
Excess
1- Common stock
2- Issue of additional shares

Expert Solution

Step 1

The accounting equation refers to the equation of the balance sheet. It is based on the method of total assets equal to total liabilities and equity. It is also considered as the foundation of a double-entry accounting system as it ensures the balance between, total assets and total liabilities.

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