17th Edition

ISBN: 9781260218831

Author: Libby

Publisher: MCG CUSTOM

Concept explainers

Shareholders and investors who invest into the capital of the firm desire to have a suitable return on their investment funding. The cost of capital reflects what shareholders expect. It is a discount rate for converting expected cash flow into present c…

Capital Structure

Capital structure is the combination of debt and equity employed by an organization in order to take care of its operations. It is an important concept in corporate finance and is expressed in the form of a debt-equity ratio.

Weighted Average Cost of Capital

The Weighted Average Cost of Capital is a tool used for calculating the cost of capital for a firm wherein proportional weightage is assigned to each category of capital. It can also be defined as the average amount that a firm needs to pay its stakehold…

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Textbook Question

Chapter 11, Problem 11.7P

Analyzing Treasury Stock Transactions

Apple Inc. designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players. In 2014, Apple had the largest market value of any company. Apple has over 92,000 full-time employees. The company’s statement of cash flows contained the following information (in millions):

2014

2013

2012

Cash flows from financing activities:

Repurchases of common stock

(45,000)

(22,860)

-0-

Required:

1. Prepare the journal entry to record the purchase of treasury stock in 2014.
2. Assume that Apple resold some of the treasury stock. The shares were originally purchased for $9 million and were resold for $10 million. Prepare the journal entry to record the sale of the treasury shares.

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Chapter 11, Problem 11.6P

Chapter 11, Problem 11.8P

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Chapter 11 Solutions

GB 112/212 MANAGERIAL ACC. W/ACCESS >C<

Ch. 11 - Prob. 1Q Ch. 11 - Prob. 2Q Ch. 11 - Explain each of the following terms: (a)...Ch. 11 - Differentiate between common stock and preferred...Ch. 11 - Explain the distinction between par value and...Ch. 11 - Define additional paid-in capital.Ch. 11 - Prob. 7Q Ch. 11 - Define treasury stock. Why do corporations acquire...Ch. 11 - How is treasury stock reported on the balance...Ch. 11 - What are the two basic requirements to support the...

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Solution Summary: The author explains the rules for debiting and crediting different accounts while they occur in business transactions to abide by the double-entry system.

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