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15-6 Caterpillar (HW 1)

15-6 Caterpillar (HW 1) - balance of positive $3,057...

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Acct 202 HW1 Due: Feb. 15th, 2010 Case: Caterpillar Inc. – Stockholder’s Equity a. i. How many shares of common stock are authorized for issue at 12/31/08? ii. How many shares of common stock have been issued at 12/31/08? iii. How many shares of common stock are outstanding at 12/31/08? b. i. How many shares were repurchased during 2008? ii. On average, how much was paid per share by Caterpillar for its repur- chases in 2008? iii. What accounting method is used to record the repurchases? Provide a sin- gle journal entry that captures the nature of Caterpillar’s repurchases in 2008? iv. How many treasury shares were held by Caterpillar at the end of 2007 and 2008? Is the difference between these two numbers equal to the number of treasury shares repurchased in 2008? If not, why not? v. At 12/31/07, the common stock account (par plus paid-in capital) has a
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Unformatted text preview: balance of positive $3,057 million. The treasury stock account has a bal-ance of negative $11,217 million. The sum of these capital accounts is negative. That is, the cash paid for a small fraction of the outstanding shares is larger than the capital raised from issuing all the outstanding shares. What’s going on here? What is the intuition? c. How many shares did Caterpillar repurchase (re-issue) between 2007 and 2008? What is the net effect on Caterpillar’s number of common shares outstanding? What effect do you think these transactions have had on reported earnings per share: positive, negative, or indeterminate from the information in the financial statements? d. Assume Caterpillar grants a 5% stock dividend on 2/5/09. Construct a simple journal entry to account for this action. Caterpillar’s stock price was $51.80 per share on this date....
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