numberofsharesoutstanding 10 47000 104700shares 2

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Unformatted text preview: crease. Book value The book value is calculated as Total Common Stockholders' Equity ÷ Number of Common Shares Outstanding. In this case, the numerator would increase by $50,000, and the denominator would increase by the 5,000 shares reissued. The book value would now be $10.80 [($540,000 – $50,000 + $50,000) ÷ (45,000 + 5,000)]. Since the book value prior to the reissue was $10.89 (see part b), the company's book value would decrease. Earnings per share Earnings per share is calculated as Net Income ÷ Number of Common Shares Outstanding. If the company did not reissue the stock, its EPS would be $1 per share ($45,000 ÷ 45,000 shares). The reissue of treasury stock has no effect on net income, but it does increase the number of common shares outstanding. So the company's EPS would decrease. Its EPS would now be $0.90 per share [$45,000 ÷ (45,000 + 5,000)]. P12–3 (1 ) (2 ) (3 ) Cash (+A) Common Stock (+SE) Issued common stock. 500,000 Cash (+A) Common Stock (+SE) Additional Paid­in Capital, Common Stock (+SE) Issued common stock....
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This homework help was uploaded on 03/03/2014 for the course ACCT 5053 taught by Professor Staff during the Fall '08 term at Oklahoma State.

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