Analyzing and Computing Average Issue Price and Treasury Stock Cost Following is the stockholders' equity section from the Campbell Soup Company balance sheet.

Shareholders' Equity (millions, except per share amounts)	August 1, 2010	August 2, 2009
Preferred stock: authorized 40 shares; non issued	$ --	$ --
Capital stock, $0.0375 par value; authorized 560 shares; issued 542 shares	20	20
Additional paid-in capital	341	332
Earnings retained in the business	8,760	8,288
Capital stock in treasury, at cost	(7,459)	(7,194)
Accumulated other comprehensive loss	(736)	(718)
Total CampbellSoup Company shareowners' equity	926	728
Noncontrolling interest	3	3
Total equity	$ 929	$ 731

Campbell Soup Company also reports the following statement of stockholders' equity.

(Millions, except per share amounts)	Capital Stock				Additional Paid-in Capital	Earnings Retained in the Business	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interest	Total share-owners' Equity
	Issued		In Treasury
	Shares	Amount	Shares	Amount
Balance at August 2, 2009	542	$ 20	(199)	$ (7,194)	$ 332	$ 8,288	$ (718)	$ 3	$ 731
Comprehensive income (loss)								--
Net earnings						844			844
Foreign currency translation adjustments, net of tax							39	--	39
Cash-flow hedges, net of tax							2		2
Pension and postretirement ;benefits, net of tax							(59)		(59)
Other comprehensive (loss)							(18)	--	(18)
Total comprehensive income (loss)									826
Dividends ($0.88 per share)						(372)			(372)
Treasury stock purchased			(14)	(472)					(472)
Treasury stock issued under managementincentive and stock options plan			7	207	9				216
Balance at August 1, 2010	542	$ 20	(206)	$ (7,459)	$ 341	$ 8,760	$ (736)	$ 3	$ 929

(a) Campbell Soup Company reports $20 million in its Common Stock account. Which of the following statements best describes the manner in which this number is computed?

The computation uses the number of issued shares multiplied by the par value of the stock.

The computation uses the number of outstanding shares multiplied by the par value of the stock.

The computation uses the number of outstanding shares multiplied by the market price of the stock.

The computation uses the number of issued shares multiplied by the market value of the stock.

(b) At what average price were the Campbell Soup shares issued? (Round your answer to two decimal places.) $Answer (c) Reconcile the beginning and ending balances of retained earnings.

(Enter any deductions as negative numbers.)

($ millions)
Retained earnings, August 2, 2009	Answer
Net earnings	Answer
Dividends	Answer
Miscellaneous	Answer
Retained earnings, August 1, 2010	Answer

(d) Campbell Soup reports an increase in stockholders' equity relating to the exercise of stock options (titled "Treasury stock issued under management incentive and stock option plans"). This transaction involves the purchase of common stock by employees at a preset price. Which of the following statements best describes the nature of this transaction?

The exercise of employee stock options resulted in the issuance of 7 million shares of stock for a total of $216 million that was recognized as a reduction of Treasury Stock and an increase in Additional Paid-In Capital.

The exercise of employee stock options resulted in the issuance of 7 million shares of stock for a total of $216 million that was recognized as an increase in the Common Stock account only.

The exercise of employee stock options resulted in the issuance of 7 million shares of stock for a total of $216 million that was recognized as an increase in the Common Stock and in the Additional Paid-In Capital.

The exercise of employee stock options resulted in the issuance of 7 million shares of stock for a total of $216 million that was recognized as a gain on sale, thus increasing Retained Earnings.

(e) Which of the following statements best describes the transaction relating to the "Treasury stock purchased" line in the statement of stockholders' equity?

Campbell Soup repurchased 14 million shares of common stock for a total of $472 million. This transaction had no effect on the components of Stockholders' Equity.

Campbell Soup repurchased 14 million shares of common stock for a total of $472 million. The effect of the repurchase of stock is to reduce Cash and Stockholders' Equity.

Campbell Soup repurchased 14 million shares of common stock for a total of $472 million. The effect of the repurchase of stock is to recognize a loss on the repurchase, thus reducing Cash and Retained Earnings.

Campbell Soup repurchased 14 million shares of common stock for a total of $472 million. The effect of this transaction is to increase Stockholders' Equity.