help me understand accounting homework

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I should also add the previous section of the problem.

>>1237192
holy fuck you retard
you literally just posted the solution in the same image.

>>1237224
no, i am comparing my answers to the provided answers, I want to know how to get those answers because I could not figure it out.

>>1237224
ur retarded ass only cares about getting the answer right if its available. I want to know how to do it so that I am able to understand the process.

$15 is the par value of the stock it purchased 3/1. You're now selling that stock off, but you sold it for $14 not the $15 par value. So you get the cash, but have to debit paid-in capital account (lowering it). Notice how on 7/1 you sold it for $17 and it was credited?

Also, retained earnings is the rollover from your income statement. RE and Equity aren't the same thing.

>>1237239
Oh, I see what's going on. It looks like it's treating it as some kind of distribution/dividend. Is that mentioned somewhere?

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>debit credit homework

>>1237192
nigga why you waitin till finals week to do your homework?

>>1237192
Paid in capital refers to the extra money investors paid for the shares. So the par value is $5, but the shares were sold for $14 ($9 over par). Therefore paid in capital is $9*9k = $81. Retained earnings comes from the previous quarter's retained earnings, the net income, and any stock operations the company does.

>>1237192
OP, everyone so far is an idiot.

Hm, it could be a mistake on your textbook's part. The values in the solution for R/E and PICEP-T/S should be swapped. I'd ask your professor about it.

Because we realize a 27,000 loss on the sale, we would first reverse the 21,000 balance in PICEP-T/S and then the remaining 6,000 would be deducted from R/E since it's recognized as a loss.

The answer should be a debit of 21,000 to PICEP and 6,000 to R/E

>>1237232
No true finance/econ/accounting major knows the right answer. You only know it after the fact and then you can use your poor reasoning skill to bullshit (aka explain) why something makes sense, except it doesnt but it should.

>>1237234
>>1237239
>>1237246
>>1237252
>>1237303
>>1237335
You're all fuck ups and will get nowhere.

>>1237332
Accountant here. This is the correct answer.

>>1237343how did you get those answers though, im confused where the retained earnings is coming from

>>1237332
where is the 21,000 and 6,000 coming from. What determines a debit or credit in retained earnings in this problem? I understand the paid in capital part, its the excess or less value you receive when selling a stock based on the par value.

>>1237283
its not finals week for me, and it was assigned this week buddy......

>>1238420
I'll put it in simple terms. Due to the transaction on July 1, we essentially made a profit of 21k. The balance of the PIC account now has 21k in it, but because our loss from the adjusted transaction was 27k and therefore greater than the earlier profit we made, we first eliminate those profits (21k) and go even further by taking the remaining 6k out of retained earnings. The 6k is now a loss.

Basically, if and when your PIC account hits zero you start to dig into retained earnings. (The question shows the beginning balance for RE)

We debit them to reduce the account balances because the normal balance for both is a credit balance.

>>1238581
thank you so much, i have been trying to figure that out forever. some people are not retarded so it would seem

>>1238609
No problem. The solution itself was wrong (typo?), so that made it even more confusing.

Anyway it's good to understand accounting for every business related major. All these edgelords will look like idiots when they can't answer an interviewer's basic accounting problems.

>>1238617
not a typo, the homework software is stupid and it seems to do this kind of stuff too often. And yes, im sort of disappointed by people trying to ease there way out of understanding the principles behind an answer.