ch.18 solution - 2. a. The shares outstanding increases by...

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2. a. The shares outstanding increases by 10 percent, so: New shares outstanding = 20,000(1.10) = 22,000 New shares issued = 2,000 Since the par value of the new shares is $1, the capital surplus per share is $24. The total capital surplus is therefore: Capital surplus on new shares = 2,000($24) = $48,000 Common stock ($1 par value) $ 22,000 Capital surplus 243,000 Retained earnings 487,400 $752,400
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b. The shares outstanding increases by 25 percent, so: New shares outstanding = 20,000(1.25) = 25,000 New shares issued = 5,000 Since the par value of the new shares is $1, the capital surplus per share is $24. The total capital surplus is therefore: Capital surplus on new shares = 5,000($24) = $120,000 Common stock ($1 par value) $ 25,000 Capital surplus 315,000 Retained earnings 412,400 $752,400 3. a. To find the new shares outstanding, we multiply the current shares outstanding times the ratio of new shares to old shares, so: New shares outstanding = 20,000(4/1) = 80,000 The equity accounts are unchanged except the par value of the stock is changed by the ratio of
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ch.18 solution - 2. a. The shares outstanding increases by...

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