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12 December, 08:24

Newly formed Electronics Services Corporation has 100,000 shares of $10 par common stock authorized. On March 1, 2014, Electronics Services issued 20,000 shares of the stock for $12 per share. On May 2 the company issued an additional 30,000 shares for $15 per share. Electronics Services was not affected by other events during 2014. Required a. Record the transactions in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). Use NA to indicate that an element was not affected by the event. (Enter any decrease

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  1. 12 December, 10:51
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    Record on horizontal statements

    Assets = Liabilities + Equity

    cash 240,000 = common stock 200,000 additional paid-in 40,000

    cash 450,000 = common stock 300,000 addtional paid-in 150,000

    issuance of shares March 1st, 2014: Financing Activity

    May 2nd additional shares issued:

    Also Financing activity.

    Explanation:

    March 1st

    20,000 x 12 = 240,000 cash

    par value 20,000 x 10 = 200,000

    additional paid-in: 240,000 - 200,000 = 40,000

    May 2nd

    30,000 x 15 = 450,000

    par value 30,000 x 10 = 300,000

    additional paid-in 450,000 - 300,000 = 150,000

    Cash flow explanation:

    Financing activity. as the company obtain funds from third parties and assume an obligation in the future (it transfer ownership to the stockholders)
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