The authorized share capital of the Alfred Cake Company is 110,000 shares. The e

Question

The authorized share capital of the Alfred Cake Company is 110,000 shares. The equity is currently shown in the company's book as follows: Common stock ($2 par value) $79,000; Additional paid-in capital $29,000; Retained Earnings $49,000 which total $157,000: Common equity consist of Treasury Stock (4,000 shares) $23,000.00; net common equity $134,000 a. Suppose that the company issues 29,000 shares at $5 a share. Construct the revised equity account. What is the Common stock_________?, what is Additional paid-in capital_______? what is retained earnings _______?, common equity ________? Treasury stock _______? and Net common equity ________? b. What would happen to the companys' books if instead it bought back 11,000 shaes at $5 per share? Construct the revised equity accounts. What would common stock be $_________?; Additional paid-in capital________?; Retained earnings _______?; Common equity ________?; Treasury stock _________?; and Net common equity $_________

Explanation / Answer

(a)The revised equity accounts Common stock $137000; additional paid-in capital $116000; Retained earnings $49000; Common equity $302000; Treasury stock $23000; and Net common equity $279000.

(b) The revised equity accounts. Common stock $57000; Additional paid-in capital $Nil Retained earnings $45000; Common Equity $102000, Treasury stock $23000 and Net common equity $79000.

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