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1. eek 8: Accounting for Shareholders’ Equity Part 3
2. Laboratory Exercise 005

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Indicate the effect of each of the following transactions on total equity.

Equity Transaction
Treasury shares are resold at more than cost	IncreaseNo EffectDecrease
Operating loss for the period.	IncreaseNo EffectDecrease
Retirement of bonds payable at more than book value	IncreaseNo EffectDecrease
Declaration of a share dividend.	IncreaseNo EffectDecrease
Acquisition of machinery for ordinary shares.	IncreaseNo EffectDecrease
Conversion of bonds payable into ordinary shares	IncreaseNo EffectDecrease
Not declaring a dividend on cumulative preference shares.	IncreaseNo EffectDecrease
Declaration of cash dividend.	IncreaseNo EffectDecrease
Payment of cash dividend.	IncreaseNo EffectDecrease

Answer 1

Equity Transaction
Treasury shares are resold at more than cost	Increase
Operating loss for the period.	Decrease
Retirement of bonds payable at more than book value	Decrease
Declaration of a share dividend.	No Effect
Acquisition of machinery for ordinary shares.	Increase
Conversion of bonds payable into ordinary shares	Increase
Not declaring a dividend on cumulative preference shares.	No Effect
Declaration of cash dividend.	Decrease
Payment of cash dividend.	No Effect