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

Shareholders' Equity (millions, except per share amounts)	August 3, 2008	July 29, 2007
Preferred stock: authorized 40 shares; non issued	$ --	$ --
Capital stock, $0.0375 par value; authorized 560 shares; issued 512 shares	19	19
Additional paid-in capital	337	331
Earnings retained in the business	7,906	7,052
Capital stock in treasury, 186 shares in 2008 and 163 shares in 2007, at cost	(6,812)	(6,015)
Accumulated other comprehensive loss	(136)	(123)
Total shareholders' equity	$ 1,314	$ 1,264

Assume 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)	Total share-owners' Equity
	Issued		In Treasury
	Shares	Amount	Shares	Amount
Balance at July 29, 2007	512	$ 19	(163)	$ (6,015)	$ 331	$ 7,052	$ (123)	$ 1,264
Net earnings						1,195		1,195
Comprehensive income (loss)							(13)	(13)
Impact on adoption of FIN 48 Note 10)						(9)		(9)
Dividends ($0.88 per share)						(332)		(332)
Treasury stock purchased			(26)	(903)				(903)
Treasury stock issued under managementincentive and stock options plan			3	106	6			112
Balance at August 3, 2008	512	$ 19	(186)	$ (6,812)	$ 337	$ 7,906	$ (136)	$ 1,314

(a) Campbell Soup Company reports $19 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 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.

The computation uses the number of issued shares multiplied by the par 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, July 29, 2007	Answer
Net earnings	Answer
Dividends	Answer
Miscellaneous	Answer
Retained earnings, August 3, 2008	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 3 million shares of stock for a total of $112 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 3 million shares of stock for a total of $112 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 3 million shares of stock for a total of $112 million that was recognized as a gain on sale, thus increasing Retained Earnings.

The exercise of employee stock options resulted in the issuance of 3 million shares of stock for a total of $112 million that was recognized as an increase in the Common Stock account only.

(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 26 million shares of common stock for a total of $903 million. The effect of the repurchase of stock is to reduce Cash and Stockholders' Equity.

Campbell Soup repurchased 26 million shares of common stock for a total of $903 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 26 million shares of common stock for a total of $903 million. The effect of this transaction is to increase Stockholders' Equity.

Campbell Soup repurchased 26 million shares of common stock for a total of $903 million. This transaction had no effect on the components of Stockholders' Equity.

(f) Campbell Soups stock price was $35.85 on August 1, 2008 (the closest trading day to fiscal year-end). Determine the companys market capitalization that day. Enter answers in millions. Round answer to the nearest million. $Answer million (g) Calculate and interpret the companys market-to-book ratio at August 1, 2008. Round answer to two decimal places.