The stockholders' equity section on the balance sheet of Mangum's, a popular department store, is shown...

The stockholders' equity section on the balance sheet of Mangum's, a popular department store, is shown below. During the year, the company reported net income of $241,195,000 and declared and paid dividends of $11,908,000.

	Stockholders’ Equity :	Current Year		Last Year
	Common stock, Class A—116,600,308 and 116,455,495 shares issued; ? and ? shares outstanding	1,166,000		1,165,000
	Common stock, Class B (convertible)—4,150,929 shares issued and outstanding	42,000		42,000
	Additional paid-in capital	777,055,000		790,987,000
	Retained earnings	2,467,727,000		?
	Less treasury stock, at cost, Class A—47,216,748 and 45,410,148 shares	(1,879,581,000	)	(936,560,000	)
1. What amount was reported in the Common Stock (Class A) account at the end of the current year? 2. How many shares of Class A Common Stock were outstanding at the end of last year and the end of the current year? 3.What amount was reported in the Retained Earnings account at the end of last year? 4.At the end of the current year, have the treasury stock transactions increased assets or decreased assets? By how much? 5. During the current year, by what amount did treasury stock transactions increase or decrease stockholders' equity? 6. At the end of the current year, what was the average price paid per share for shares held in treasury stock?

Solutions

Expert Solution

1. Common stock (Class A) at the end of current year: $1,166,000

	Current Year	Last Year
Number of shares issued	116,600,308	116,455,495
Less: Treasury stock	47,216,748	45,410,148
Number of shares outstanding	69,383,560	71,045,347

3. Retained earnings at the end of last year: $2,238,440,000

Retained earnings, ending balance $	2,467,727,000
Less net income	241,195,000
	2,226,532,000
Add dividends	11,908,000
Retained earnings, beginning balance $	2,238,440,000

4. Decreased assets by $943,021,000

Ending treasury stock	1,879,581,000
Less: Beginning treasury stock $	936,560,000
Increase in treasury stock $	943,021,000

5. Decreased stockholders' equity by $943,021,000

6. Average price paid per share of treasury stock = $1,879,581,000/47,216,748 = $39.81 (rounded to two decimal places)

ekkarill92 answered 8 months ago

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