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LenKa [72]
3 years ago
6

In previous years, Cox Transport reacquired 4 million treasury shares at $22 per share and, later, 2 million treasury shares at

$25 per share. If Cox now sells 2 million treasury shares at $27 per share and determines cost as the weighted-average cost of treasury shares, by what amount will Cox’s paid-in capital - share repurchase increase? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)
Business
1 answer:
crimeas [40]3 years ago
3 0

Answer:

$8 million

Explanation:

Weighted-average cost = [(4,000,000 × $22) + (2,000,000 × $25)] ÷ (4,000,000 + 2,000,000) = $23

Increase in paid-in capital - share repurchase per share = selling price —Weighted-average cost = $27 - $23 = $4

Amount of increase in paid-in capital—share repurchase = Number of treasury shares × $4 = 2 million × $4 = $8 million

Therefore, Cox’s paid-in capital - share repurchase will increase by $8 million.

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C. Organize staff is the answer.

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3 years ago
A company uses the periodic average cost method to account for inventory. For the year, the company had the following beginning
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Answer:

The amount reported for ending inventory is incorrect because management used a simple average instead of weighted-average to calculate the unit cost of inventory for the year.

Explanation:

a. Using weighted-average

Number of units available for sales = 100 + 400 + 800 = 1,300 units

Cost inventory available for sale = (100 * $2,800) + (400 * $3,000) + (800 * $3,200) = $4,040,000

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Total periodic ending inventory = $3,107.69 * 300 = $932,307.69  

b. Using simple average

Inventory cost per unit = ($2,800 + $3,000 + $3,200) / 3 = $3,000  

Total ending inventory = $3,000 * 300 = $900,000

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The correct ending inventory should be $932,307.69  

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4 0
2 years ago
Blossom Corporation is authorized to issue 49,000 shares of $5 par value common stock. During 2017, Blossom took part in the fol
Tanzania [10]

Answer:

See explanation section

Explanation:

Requirement A

Debit      Cash                                         $194,600

Credit     Common stock - Par value                             $ 22,500

Credit     Common stock - Additional paid-in-capital   $172,100

Calculation:

Cash:  4,500 shares × $45 = $202,500

As the company's par value is $5,

Common stock - Par value: 4,500 shares × $5 = $22,500

As the market value of the stock is $45, the additional stock value = $45 - $5 = $40. Moreover, the company has issuance cost of $7,900

Additional common stock apart from par value minus the issuance cost = ($4,500 shares × $40) - $7,900 = $180,000 - $7,900 = $172,100.

<em>The company issue common stock with a market value of $45 and issuance cost of $7,900 in exchange of cash.</em>

Requirement B

Debit      Land                                         $50,600

Credit     Common stock - Par value                             $ 5,500

Credit     Common stock - Additional paid-in-capital   $45,100

Calculation:

Land:  1,100 shares × $46 = $50,600

As the company's par value is $5,

Common stock - Par value: 1,100 shares × $5 = $5,500

As the market value of the stock is $46, the additional stock value = $46 - $5 = $41.

Additional common stock apart from par value = ($1,100 shares × $41) = $45,100.

Although the land is appraised for $49,000, due to the increased market price stock, it is valued more.

<em>The company issue common stock with a market value of $46 in exchange for land.</em>

Requirement C

Debit    Treasury Stock          $19,270

Credit              Cash                $19,270

Purchasing share from the stock market is known as treasury stock.

Calculation: Treasury stock = 470 shares × $41 = $19,270

Debit     Cash                          $17,860

Credit    Common Stock - par value                             $2,350

Credit    Common stock - Additional paid-in-capital   $15,510

Calculation:

As the company's par value is $5,

Common stock - Par value: 470 shares × $5 = $2,350

Additional common stock apart from par value = $470 shares × ($38 - $5) = $15,510.

<em>The company issue common stock with a market value of $38 after purchasing those treasury stock at $41 per share.</em>

3 0
3 years ago
8. You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the e
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Answer:

Find attached question containing the cash flows under the purchasing option,note that the discount rate in the attached is 7.1% but the main question has 6.9%,hence  I would make use of 6.9%

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Explanation:

The cash flows under the purchasing option is $39,200 now and $2000 each year for 5 years.

In determining the better of the two options we determine the present value of each option as follows:

leasing option=$10,100/(1+6.9%)^1+$10,100/(1+6.9%)^2+$10,100/(1+6.9%)^3+$10,100/(1+6.9%)^4+$10,100/(1+6.9%)^5=$ 41,523.11  

Purchase option=$39,200+$2000/(1+6.9%)^1+$2000/(1+6.9%)^2+$2000/(1+6.9%)^3+$2000/(1+6.9%)^4+$2000/(1+6.9%)^5=$ 47,422.40  

Download xlsx
8 0
3 years ago
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