7. Inbox Software was founded in 2007. Its founder put up $2 million for 500,000 shares of...
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7. Inbox Software was founded in 2007. Its founder put up $2 million for 500,000 shares of common stock. Each share had a par value of $.10.
a. Construct an equity account (like the one in Table 14.2 ) for Inbox on the day after its founding. Ignore any legal or administrative costs of setting up the company.
b. After two years of operation, Inbox generated earnings of $120,000 and paid no dividends.
What was the equity account at this point?
c. After three years the company sold 1 million additional shares for $5 per share. It earned
$250,000 during the year and paid no dividends. What was the equity account?
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