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) Preferred stock: authorized 40 shares: non issued Capital stock, $0.0375 par value: authorized 560 shares: issued 542 shares Additional paid-in capital Earnings retained in the business Capital stock in treasury, at cost Accumulated other comprehensive loss Total CampbellSoup Company shareowners' equity Noncontrolling interest Total equity (Millions, except per share amounts) Balance at August 2, 2009 Net earnings Other comprehensive income (loss) Dividends ($0.88 per share) Treasury stock purchased August 1, 2010 August 2, 2009 S- S- 20 341 8,760 (7,459) (736) 926 Treasury stock issued under management incentive and stock options plan Balance at August 1, 2010 Campbell Soup Company also reports the following statement of stockholders' equity. Capital Stock Earnings In Treasury Additional Retained in Shares Amount Shares Amount Paid-in Capital the Business 542 $20 (199) $ (7,194) $ 332 $8,288 844 3 $929 Issued 542 20 332 8,288 (7.194) (718) 728 3 $731 (14) 7 (472) 207 $20 (206) $ (7,459) 9 $ 341 (372) $8,760 Total Accumulated Other Comprehensive Noncontrolling share-owners Income (Loss) Interest Equity $(718) (18) $(736) $3 $3 $731 844 (18) (372) (472) 216 $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? OThe computation uses the number of issued shares multiplied by the par value of the stock. OThe computation uses the number of outstanding shares multiplied by the par value of the stock. OThe computation uses the number of outstanding shares multiplied by the market price of the stock. OThe computation uses the number of issued shares multiplied by the market value of the stock.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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(b) At what average price were the Campbell Soup shares issued? (Round your answer to two decimal places.)
$
(c) Reconcile the beginning and ending balances of retained earnings.
(Enter any deductions as negative numbers.)
($ millions)
Retained earnings, August 2, 2009 $
Net earnings
Dividends
Miscellaneous
Retained earnings, August 1, 2010 $
(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?
OThe 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.
OThe 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.
OThe 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.
OThe 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?
OCampbell 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.
OCampbell 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.
OCampbell 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.
OCampbell Soup repurchased 14 million shares of common stock for a total of $472 million. The effect of this transaction is to increase Stockholders' Equity.
(f) Campbell Soup's stock price was $35.90 on July 30, 2010 (the closest trading day to fiscal year-end). Determine the company's market capitalization that day.
Enter answers in millions. Round answer to the nearest million.
$
million
(g) Calculate and interpret the company's market-to-book ratio at July 30, 2010.
Round answer to two decimal places.
Transcribed Image Text:(b) At what average price were the Campbell Soup shares issued? (Round your answer to two decimal places.) $ (c) Reconcile the beginning and ending balances of retained earnings. (Enter any deductions as negative numbers.) ($ millions) Retained earnings, August 2, 2009 $ Net earnings Dividends Miscellaneous Retained earnings, August 1, 2010 $ (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? OThe 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. OThe 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. OThe 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. OThe 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? OCampbell 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. OCampbell 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. OCampbell 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. OCampbell Soup repurchased 14 million shares of common stock for a total of $472 million. The effect of this transaction is to increase Stockholders' Equity. (f) Campbell Soup's stock price was $35.90 on July 30, 2010 (the closest trading day to fiscal year-end). Determine the company's market capitalization that day. Enter answers in millions. Round answer to the nearest million. $ million (g) Calculate and interpret the company's market-to-book ratio at July 30, 2010. Round answer to two decimal places.
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)
Preferred stock: authorized 40 shares; non issued
Capital stock, $0.0375 par value; authorized 560 shares; issued 542 shares
Additional paid-in capital
Earnings retained in the business
Capital stock in treasury, at cost
Accumulated other comprehensive loss
Total CampbellSoup Company shareowners' equity
Noncontrolling interest
Total equity
(Millions, except per share amounts)
Campbell Soup Company also reports the following statement of stockholders' equity.
Capital Stock
Earnings
In Treasury
Additional Retained in
Shares Amount Shares Amount Paid-in Capital the Business
542 $20 (199) $(7,194)
$ 332 $8,288
844
Balance at August 2, 2009
Net earnings
Other comprehensive income (loss)
Dividends ($0.88 per share)
August 1, 2010 August 2, 2009
$--
$--
20
20
341
332
8,760
(7,459)
(736)
926
3
$ 929
Treasury stock purchased
Treasury stock issued under management incentive and stock options plan
Balance at August 1, 2010
Issued
8,288
(7,194)
(718)
728
3
$ 731
542
(14) (472)
7 207
$20 (206) $ (7,459)
9
$341
(372)
$8,760
Total
Accumulated
Other
Comprehensive Noncontrolling share-owners'
Income (Loss) Interest
Equity
$ (718)
$ 731
844
(18)
(372)
(472)
216
$ 929
(18)
$ (736)
$3
$3
(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?
OThe computation uses the number of issued shares multiplied by the par value of the stock.
OThe computation uses the number of outstanding shares multiplied by the par value of the stock.
OThe computation uses the number of outstanding shares multiplied by the market price of the stock.
OThe computation uses the number of issued shares multiplied by the market value of the stock.
Transcribed Image Text: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) Preferred stock: authorized 40 shares; non issued Capital stock, $0.0375 par value; authorized 560 shares; issued 542 shares Additional paid-in capital Earnings retained in the business Capital stock in treasury, at cost Accumulated other comprehensive loss Total CampbellSoup Company shareowners' equity Noncontrolling interest Total equity (Millions, except per share amounts) Campbell Soup Company also reports the following statement of stockholders' equity. Capital Stock Earnings In Treasury Additional Retained in Shares Amount Shares Amount Paid-in Capital the Business 542 $20 (199) $(7,194) $ 332 $8,288 844 Balance at August 2, 2009 Net earnings Other comprehensive income (loss) Dividends ($0.88 per share) August 1, 2010 August 2, 2009 $-- $-- 20 20 341 332 8,760 (7,459) (736) 926 3 $ 929 Treasury stock purchased Treasury stock issued under management incentive and stock options plan Balance at August 1, 2010 Issued 8,288 (7,194) (718) 728 3 $ 731 542 (14) (472) 7 207 $20 (206) $ (7,459) 9 $341 (372) $8,760 Total Accumulated Other Comprehensive Noncontrolling share-owners' Income (Loss) Interest Equity $ (718) $ 731 844 (18) (372) (472) 216 $ 929 (18) $ (736) $3 $3 (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? OThe computation uses the number of issued shares multiplied by the par value of the stock. OThe computation uses the number of outstanding shares multiplied by the par value of the stock. OThe computation uses the number of outstanding shares multiplied by the market price of the stock. OThe computation uses the number of issued shares multiplied by the market value of the stock.
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