The shareholders equity accounts of Koebels Family Bakery Ltd are as follows Common shares $12,200 Retained earnings 241,026 Janet and Brian are thinking that it might be best for all three of them to each own 10 shares of Koebels Family Bakery Ltd They are confused, however, about the process of shares being reacquired and have come to you with the following questions 1 If Koebels Family Bakery Ltd reacquires the common shares we hold, how will a fair value for each common share reacquired be determined 2 Natalie has recently purchased shares in Koebels Family Bakery Ltd for $1,200 per share Is this amount a fair value to use as a purchase price for reacquisition of the shares Why or why not 3 How much cash will Koebels Family Bakery Ltd need to reacquire the shares that we hold if we assume a price of $1,200 per share 4 Last year the bakery paid total dividends of $85,000 If our shares are reacquired, will Koebels Family Bakery Ltd be able to pay a dividend next year Do you think there will be enough in retained earnings to pay a dividend Will the amount of the dividend we each receive change once Natalie owns a one third interest in the company 5 If we choose not to have the company reacquire our shares, then how can we ensure that Natalie stays on with us Prepare the journal entry to record the reacquisition of shares by Koebels Family Bakery Ltd from Janet and Brian assuming that $1,200 per share is a fair value (Credit account titles are automatically indented when the amount is entered Do not indent manually Round answer to 0 decimal places, e g 5,275 If no entry is required, select No Entry for the account titles and enter 0 for the amounts ) Account Titles and Explanation Debit Credit Calculate the amount of share capital after the shares have been reacquired from Janet and Brian and the average cost per share (Round answer to 0 decimal places, e g 5,275 ) Balance of share capital after common share repurchase $ Click if you would like to Show Work for this question Open Show Work

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The shareholders equity accounts of Koebels Family Bakery Ltd. are as follows: Common shares $12,200 Retained earnings 241,026 Janet and Brian are thinking that it

The shareholders equity accounts of Koebels Family Bakery Ltd. are as follows:

Common shares		$12,200
Retained earnings		241,026

Janet and Brian are thinking that it might be best for all three of them to each own 10 shares of Koebels Family Bakery Ltd. They are confused, however, about the process of shares being reacquired and have come to you with the following questions:

1.	If Koebels Family Bakery Ltd. reacquires the common shares we hold, how will a fair value for each common share reacquired be determined?
2.	Natalie has recently purchased shares in Koebels Family Bakery Ltd. for $1,200 per share. Is this amount a fair value to use as a purchase price for reacquisition of the shares? Why or why not?
3.	How much cash will Koebels Family Bakery Ltd. need to reacquire the shares that we hold if we assume a price of $1,200 per share?
4.	Last year the bakery paid total dividends of $85,000. If our shares are reacquired, will Koebels Family Bakery Ltd. be able to pay a dividend next year? Do you think there will be enough in retained earnings to pay a dividend? Will the amount of the dividend we each receive change once Natalie owns a one-third interest in the company?
5.	If we choose not to have the company reacquire our shares, then how can we ensure that Natalie stays on with us?

Prepare the journal entry to record the reacquisition of shares by Koebels Family Bakery Ltd. from Janet and Brian assuming that $1,200 per share is a fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answer to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

Calculate the amount of share capital after the shares have been reacquired from Janet and Brian and the average cost per share. (Round answer to 0 decimal places, e.g. 5,275.)

Balance of share capital after common share repurchase

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