Question

Shareholders’ Equity Transactions
The following transactions occurred during the year for The Niagara Company:

Generated net income of $2.5 million.

Sold common stock having a par value of $0.01 for $22 per share.

Paid a cash dividend of $2 per share to its preferred shareholders.

Issued a 10% stock dividend on its outstanding common stock.

Repurchased 10,000 shares of common stock at $18 per share.

Declared a 2-for-1 forward stock split on its common stock.

Identify whether the above transactions increased, decreased, or had no effect on total shareholders’ equity. Identify the specific shareholders’ equity accounts affected by each transaction and indicate whether the accounts increased, decreased, or remained unchanged.

Answer 1