Equity Accounts.

a. Look back at problem 1. Suppose that the company issues 10,000 shares at $5 a share.

Which of the above figures would change?

b. What would happen to the company’s books if instead it bought back 1,000 shares at $5 per share?

problem 1

quity Accounts. The authorized share capital of the Alfred Cake Company is 100,000 shares. The equity is currently shown in the company’s books as follows:

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Common stock ($1.00 par value) Additional paid-in capital $ 60,000 10,000 Retained earnings 30,000 Common equity 100,000 Treasury stock (2,000 shares) 5,000 Net common equity 95,000