Financial Accounting: In an Economic Context

BRIEF EXERCISES

REAL DATA

BE12-1

Inferring shareholders' equity transactions

The following information was taken from the 2008 statement of shareholders' equity of The Home Depot (dollars in millions).

a. What portion of net income was paid out in dividends during the year?

b. Explain how the issuance of shares affected the basic accounting equation.

c. Explain how the purchase of treasury stock affected the basic accounting equation.

d. How much cash was distributed to the company's shareholders during the year?

e. What was the balance sheet value of the retained earnings account at the end of the year?

REAL DATA

BE12-2

Stock splits and market values

When Tandy (RadioShack) Corporation announced a 2:1 stock split, the company had 97 million shares outstanding, trading at $100 per share.

a. Estimate the number of shares outstanding and market price per share immediately after the split.

b. Estimate the company's overall market value, and explain whether you expect the company's overall market value to change due to the split.

REAL DATA

BE12-3

Treasury stock purchases

The following information was taken from the 2009 annual report of Coca-Cola (dollar and share amounts in millions).

a. At what average price did the company repurchase its shares in 2007?

b. At what average price did ...