Thistle Links: An Equity Financing Exercise

On October 31, 2021, Thistle Links Inc. (Thistle), a sports management company headquartered in Toronto, Ontario, had just finished its fiscal year 2021. During the year, the company had experienced a wide variety of occurrences related to its equity financing activities. Starting with the shareholders’ equity section of the previous year’s statement of financial position, Thistle’s accountant is tasked with recording all transactions that occurred over the course of the year.

This exercise is best positioned within an equity financing module in an introductory-level financial accounting course. The exercise includes examples of a wide array of equity financing transactions to allow students to practically apply their knowledge of this topic. Therefore, the exercise is best taught after students have learned and practiced these topics. This financial accounting exercise requires students to apply their knowledge and understanding of key concepts relating to the accounting for equity financing activities. After working through the exercise and assignment questions, students will be able to do the following:<ul><li>Account for a variety of equity-financing-related transactions.</li><li>Identify equity-financing-related transactions that do not require accounting transactions (such as stock splits).</li><li>Differentiate between instances when the market price of a company’s shares impacts its accounting transactions and those when it does not.</li><li>Account for the issuance of shares in exchange for cash or assets, the declaration and payment of both cash and stock dividends, share conversions, and share repurchases/buybacks.</li></ul>

• financial accounting
• t-accounts
• equity financing
• stocks
• share issuance
• stock split
• dividends
• share conversion