Question
In: Accounting
On June 8, Steering Ltd was incorporated and issued 56,000 common shares for $280,000. On August...
On June 8, Steering Ltd was incorporated and issued 56,000 common shares for $280,000. On August 19, an additional 14,000 shares were issued for $84,000. On November 2, the company paid $29,760 to reacquire 6,200 common shares and on December 7 it paid $51,350 to reacquire 7,900 common shares.
Calculate the average cost of the common shares on June 8, August 19, November 2, and December 7.
Solutions
Expert Solution
| ans 1 | june 8 th | |||||||
| Number of stock | value | |||||||
| issue | 56000 | 280,000 | ||||||
| therefore average price = 280000/56000 | 5.00 | |||||||
| ans 2 | 19-Aug | |||||||
| Number of stock | value | |||||||
| issue | 56000 | 280,000 | ||||||
| additional | 14000 | 84000 | ||||||
| 70000.0 | 364000.0 | |||||||
| Average price = | =364000/70000 | 5.20 | ||||||
| ans 3 | 2-Nov | |||||||
| Number of stock | value | |||||||
| issue | 56000 | 280,000 | ||||||
| additional | 14000 | 84000 | ||||||
| 70000.0 | 364000.0 | 5.20 | ||||||
| Note : reacquired stock will not impact equity it will be treated as treasury stock | ||||||||
| ans 4 | 7-Dec | |||||||
| Number of stock | value | |||||||
| issue | 56000 | 280,000 | ||||||
| additional | 14000 | 84000 | ||||||
| 70000.0 | 364000.0 | 5.20 | ||||||
| Note : reacquired stock will not impact equity it will be treated as treasury stock | ||||||||
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