Book value of common stockholders’ equity of FedEx, May 31, 2014 (figures in $ millions) Common...

Book value of common stockholders’ equity of FedEx, May 31, 2014 (figures in $ millions)


Common stock ($0.10 par value per share)	$	32
Additional paid-in capital		2,788
Retained earnings		16,902
Treasury shares at cost		(4,927	)
Other		170
Net common equity		14,965
Note:
Authorized shares (millions)		900
Issued shares, of which		320
Outstanding shares		278
Treasury shares		42

a. Suppose that FedEx now issues 4 million shares at $130 a share. Update the table below with the new values. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Enter your answers in millions rounded to 1 decimal place.)


Common shares ($0.10 par value per share)
Additional paid-in capital
Retained earnings
Treasury shares at cost
Other
Net common equity	0.0

b. What would happen to the book value of common stockholders’ equity if instead FedEx bought back 4 million shares at $130 per share? (Negative amounts should be indicated by a minus sign. Enter your answers in millions rounded to 1 decimal place.)


Common shares ($0.10 par value per share)
Additional paid-in capital
Retained earnings
Treasury shares at cost
Other
Net common equity	0.0

Expert Solution


	JOURNAL ENTRY FOR ISSUE OF NEW SHARES:
		($ million)	($ million)
	Cash….Dr	520		(4*130)
	Common Stock……Cr		0.4	(4*0.1)
	AdditionalPaid in Capital		519.6	(520-0.4)


	Common shares ($0.10 par value per share)	32.4	(32+0.4)
	Additional paid-in capital	3307.6	(2788+519.6)
	Retained earnings	16902	(No Change)
	Treasury shares at cost	-4927	(No Change)
	Other	170	(No Change)
	Net common equity	15485
	Net common equity Before issue	14965
	Amount of shares issued	520
	Net common equity after issue	15485

b	JOURNAL ENTRY FOR SHARE BUY BACK
		($ million)	($ million)
	Treasury Shares at cost….Dr	520		(4*130)
	Cash …………………………………………....Cr		520

	Common shares ($0.10 par value per share)	32
	Additional paid-in capital	2788
	Retained earnings	16902
	Treasury shares at cost	-5447	(-4927-520)
	Other	170
	Net common equity	14445
	Net common equity Before issue	14965
	Amount of share buy back	520
	Net common equity after issue	14445	(14965-520)

jeff jeffy answered 2 years ago

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Book value of common stockholders’ equity of FedEx, May 31, 2014 (figures in $ millions) Common...

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