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 532 shares Additional paid in capital 337 331 Earnings retained in the business 7,902 7,032 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 $1,311 $1,245 Assume Campbell Soup Company also reports the following statement of stockholders' equity! Accumulated Capital Stock Earnings Other Total Issued in Treasury Additional Retained in Comprehensive share-owners Millons, except per share amounts) Shares Amount Shares Amount Paid-in Capital the Business Income (Loss) Equity Balance at july 23, 2007 532 $20 (163) $6.015) $ 1245 Comprehensive income oss Foreign currency translation adjustments, net of tax Cashow hedge net of tax P or and perement benefits.net of tax Other como 3072 307 1903) de n oncent and stock options plan 126) 19031 3 106 (186) 5(6,812) 532 $20 57.901 (136) $ 1311 C 5 20 on in Common Stock account. Which of the following statements best describes the manner in which this number is computed multiplied by the market price of the stock (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 outstanding shares multiplied by the market price of the stock. The computation uses the number of issued shares multiplied by the par value 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 outstanding 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.) $ 0 (c) Reconcile the beginning and ending balances of retained earnings, (Enter any deductions as negative numbers.) Smillions) Retained earnings, July 29, 2007 Net earnings Dividends Retained earnings August 3, 2008 5 (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 a gain on sale, thus increasing Retained Earning 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. The exercse of employee stock options resulted in the issuance of 3 million shares of stock for a total of 5112 million that was recognized as a reduction of Treasury Stock and an increase Additional Paid in Capital (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 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. 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 an increase in the Common Stock and in the Additional Paid-in Capital. (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. This transaction had no effect on the components 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 this transaction is to increase 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