Analyzing and Computing Average Issue Price and Treasury Stock Cost Assume this is the stockholders' equity section fro
Posted: Wed Jul 06, 2022 6:25 am
Analyzing and Computing Average Issue Price and Treasury StockCost Assume this is the stockholders' equity section from the CampbellSoup Company balance sheet.
Assume Campbell Soup Company also reports the following statementof stockholders' equity.
(a) Campbell Soup Company reports $20 million in its Common Stockaccount. Which of the following statements best describes themanner in which this number is computed?
The computation uses the number of outstanding shares multipliedby the market price of the stock.
The computation uses the number of issued shares multiplied bythe par value of the stock.
The computation uses the number of issued shares multiplied bythe market value of the stock.
The computation uses the number of outstanding shares multipliedby the par value of the stock.
(b) At what average price were the Campbell Soup shares issued?(Round your answer to two decimal places.) $Answer
(c) Reconcile the beginning and ending balances of retainedearnings.
(Enter any deductions as negative numbers.)
(d) Campbell Soup reports an increase in stockholders' equityrelating to the exercise of stock options (titled "Treasury stockissued under management incentive and stock option plans"). Thistransaction involves the purchase of common stock by employees at apreset price. Which of the following statements best describes thenature of this transaction?
The exercise of employee stock options resulted in the issuanceof 3 million shares of stock for a total of $112 million that wasrecognized as a gain on sale, thus increasing RetainedEarnings.
The exercise of employee stock options resulted in the issuanceof 3 million shares of stock for a total of $112 million that wasrecognized as an increase in the Common Stock account only.
The exercise of employee stock options resulted in the issuanceof 3 million shares of stock for a total of $112 million that wasrecognized as a reduction of Treasury Stock and an increase inAdditional Paid-In Capital.
The exercise of employee stock options resulted in the issuanceof 3 million shares of stock for a total of $112 million that wasrecognized as an increase in the Common Stock and in the AdditionalPaid-In Capital.
(e) Which of the following statements best describes thetransaction relating to the "Treasury stock purchased" line in thestatement of stockholders' equity?
Campbell Soup repurchased 26 million shares of common stock fora total of $903 million. This transaction had no effect on thecomponents of Stockholders' Equity.
Campbell Soup repurchased 26 million shares of common stock fora total of $903 million. The effect of the repurchase of stock isto reduce Cash and Stockholders' Equity.
Campbell Soup repurchased 26 million shares of common stock fora total of $903 million. The effect of this transaction is toincrease Stockholders' Equity.
Campbell Soup repurchased 26 million shares of common stock fora total of $903 million. The effect of the repurchase of stock isto recognize a loss on the repurchase, thus reducing Cash andRetained Earnings.
(f) Campbell Soup’s stock price was $35.85 on August 1, 2008(the closest trading day to fiscal year-end). Determine thecompany’s market capitalization that day.Enter answers in millions. Round answer to the nearestmillion.$Answer
(g) Calculate and interpret the company’s market-to-book ratio atAugust 1, 2008. Round answer to two decimal places. Answer
Assume Campbell Soup Company also reports the following statementof stockholders' equity.
(a) Campbell Soup Company reports $20 million in its Common Stockaccount. Which of the following statements best describes themanner in which this number is computed?
The computation uses the number of outstanding shares multipliedby the market price of the stock.
The computation uses the number of issued shares multiplied bythe par value of the stock.
The computation uses the number of issued shares multiplied bythe market value of the stock.
The computation uses the number of outstanding shares multipliedby the par value of the stock.
(b) At what average price were the Campbell Soup shares issued?(Round your answer to two decimal places.) $Answer
(c) Reconcile the beginning and ending balances of retainedearnings.
(Enter any deductions as negative numbers.)
(d) Campbell Soup reports an increase in stockholders' equityrelating to the exercise of stock options (titled "Treasury stockissued under management incentive and stock option plans"). Thistransaction involves the purchase of common stock by employees at apreset price. Which of the following statements best describes thenature of this transaction?
The exercise of employee stock options resulted in the issuanceof 3 million shares of stock for a total of $112 million that wasrecognized as a gain on sale, thus increasing RetainedEarnings.
The exercise of employee stock options resulted in the issuanceof 3 million shares of stock for a total of $112 million that wasrecognized as an increase in the Common Stock account only.
The exercise of employee stock options resulted in the issuanceof 3 million shares of stock for a total of $112 million that wasrecognized as a reduction of Treasury Stock and an increase inAdditional Paid-In Capital.
The exercise of employee stock options resulted in the issuanceof 3 million shares of stock for a total of $112 million that wasrecognized as an increase in the Common Stock and in the AdditionalPaid-In Capital.
(e) Which of the following statements best describes thetransaction relating to the "Treasury stock purchased" line in thestatement of stockholders' equity?
Campbell Soup repurchased 26 million shares of common stock fora total of $903 million. This transaction had no effect on thecomponents of Stockholders' Equity.
Campbell Soup repurchased 26 million shares of common stock fora total of $903 million. The effect of the repurchase of stock isto reduce Cash and Stockholders' Equity.
Campbell Soup repurchased 26 million shares of common stock fora total of $903 million. The effect of this transaction is toincrease Stockholders' Equity.
Campbell Soup repurchased 26 million shares of common stock fora total of $903 million. The effect of the repurchase of stock isto recognize a loss on the repurchase, thus reducing Cash andRetained Earnings.
(f) Campbell Soup’s stock price was $35.85 on August 1, 2008(the closest trading day to fiscal year-end). Determine thecompany’s market capitalization that day.Enter answers in millions. Round answer to the nearestmillion.$Answer
(g) Calculate and interpret the company’s market-to-book ratio atAugust 1, 2008. Round answer to two decimal places. Answer