Question

The following financial statement information is from five separate companies.

Company Company Company Company Company

A B C D E

December 31, 2016

Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(55,000 \)34,000 \(24,000 \)60,000 $119,000

Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 24,500 21,500 9,000 40,000 ?

December 31, 2017

Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,000 40,000 ? 85,000 113,000

Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . ? 26,500 29,000 24,000 70,000

During year 2017

Stock issuances . . . . . . . . . . . . . . . . . . . . 6,000 1,400 9,750 ? 6,500

Net income (loss) . . . . . . . . . . . . . . . . . . . 8,500 ? 8,000 14,000 20,000

Cash dividends . . . . . . . . . . . . . . . . . . . . . 3,500 2,000 5,875 0 11,000

Required

4. Compute the amount of stock issuances for Company D during year 2017.

Short answer

The new issue of 2017 will be $27,000

Step-by-step solution

Step-by-Step SolutionStep 1 Calculation of equity for 2016

$$\begin{gathered} \mathbf{Equity}\mathbf{=}\mathbf{Assets}\mathbf{-}\mathbf{Liabilities} \\ \mathbf{=}\mathbf{60}\mathbf{,}\mathbf{000}\mathbf{-}\mathbf{40}\mathbf{,}\mathbf{000} \\ \mathbf{=}\mathbf{\$}\mathbf{20}\mathbf{,}\mathbf{000} \end{gathered}$$

Calculation of equity for 2017

$$\begin{gathered} \mathbf{Equity}\mathbf{=}\mathbf{Assets}\mathbf{-}\mathbf{Liabilities} \\ \mathbf{=}\mathbf{85}\mathbf{,}\mathbf{000}\mathbf{-}\mathbf{24}\mathbf{,}\mathbf{000} \\ \mathbf{=}\mathbf{\$}\mathbf{61}\mathbf{,}\mathbf{000} \end{gathered}$$

Calculation of New Issue

$$\begin{gathered} \mathbf{NewIssue}\mathbf{=}\mathbf{Equityof}\mathbf{2017}\mathbf{-}\mathbf{(}\mathbf{Equityof}\mathbf{2016}\mathbf{+}\mathbf{NetIncome}\mathbf{-}\mathbf{Cashdividends}\mathbf{)} \\ \mathbf{=}\mathbf{61}\mathbf{,}\mathbf{000}\mathbf{-}\mathbf{(}\mathbf{20}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{14}\mathbf{,}\mathbf{000}\mathbf{-}\mathbf{0}\mathbf{)} \\ \mathbf{=}\mathbf{\$}\mathbf{27}\mathbf{,}\mathbf{000} \end{gathered}$$