E8-10B. Analyze equity accounts(.L O 1,2,3,5)

The following balances were shown on the year-end balance sheets for 2007 and 2008 for High Note Publishing Company. For each item, give the most likely reason for the change from one year to the next.

12/31/07

12/31/08

Explanation

Common stock

$ 35,000

$43,000

Paid- in capital

$115.000

155,000

Retained earnings

$142,000

*$160,500

Treasury stock

$ (2,125)

$ (2,625)