On January 1, 2018, Juniper Corporation issued 60,000 shares of its total 200,000 authorized shares of $4 par value common stock for $8 per share. On December 31, 2018, Juniper Corporations common stock is trading 12$ per share. Assuming Juniper Corporation did not issue any more common stock in 2018, how does the increase in value of its outstanding stock affect Juniper and why?
On January 1, 2018, Juniper Corporation issued 60,000 shares of its total 200,000 authorized shares of $4 par value common stock for $8 per share. On December 31, 2018, Juniper Corporations common stock is trading 12$ per share. Assuming Juniper Corporation did not issue any more common stock in 2018, how does the increase in value of its outstanding stock affect Juniper and why?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
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On January 1, 2018, Juniper Corporation issued 60,000 shares of its total 200,000 authorized shares of $4 par value common stock for $8 per share. On December 31, 2018, Juniper Corporations common stock is trading 12$ per share. Assuming Juniper Corporation did not issue any more common stock in 2018, how does the increase in value of its outstanding stock affect Juniper and why?
a) Juniper should recognize additional net income for 2028 of $4 per share, or $240,000
b) Paid in capital at December 31, 2018 is $720,000 (i.e., 60,000 shares times $12 per share)
c) This increase in market value of outstanding stock is not recorded in the financial statements of Juniper Corporation
d) each shareholder must pay an additional $4 per share to juniper
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