Early in 2016, Teek Corporation was formed with authorization to issue 50,000 shares of $3 par value common stock. All shares were issued at a price of $10 per share. The corporation reported net income of $160,000 in 2016, $89,200 in 2017, and $97,000 in 2018. No dividends were declared in any of these three years.
In 2017, the company purchased its own shares for $30,000 in the open market. In 2018, it reissued all of its treasury stock for $40,000.
Instructions
a. Prepare the stockholders' equity section of the balance sheet at December 31, 2018. Include a supporting schedule showing your computation of retained earnings at the balance sheet date.
b. As of December 31, compute the company's book value per share of common stock.
c. Explain how the treasury stock transactions in 2017 and 2018 were reported in the company's statement of cash flows.