The following table shows the equity account (book value) of the DeWitt Com- pany, as of December 31, 2014. Currently, DeWitt Company is under pressure from shareholders to repurchase shares. DeWitts cash balance is $5,000,000. The stock is trading for $20 a share and the equity section of its balance sheet appears as shown in Table 14. To pacify investors, the company decided to repurchase 50,000 shares of common stock.

a. In Table 12, reconstruct the shareholders equity section of the DeWitt balance sheet to reflect the company repurchasing 50,000 shares of stock. An asterisk () marks the spaces to be filled.

b. Indicate what the new price level is expected to be.

c.What is the level in the cash account after the stock repurchase?

Table 11 Before Repurchase The DeWitt Company equity account, December 31, 2013

SHAREHOLDER EQUITY

Common Stock ($5 par value; 1,000,000 shares) $5,000,000

Additional paid-in capital $5,000,000

Retained earnings $15,000,000

Total shareholders equity $25,000,000

Table 12 After Repurchase The DeWitt Company equity account, December 31, 2013

SHAREHOLDER EQUITY

Common Stock (* _______ par value; *__________ shares) *_________________

Additional paid-in capital *________________

Retained earnings *________________

Total shareholders equity *_________________