balances of the shareholders’ equity accounts

Gfeller Enterprises began fiscal 2010 with the following shareholders’ equity information:

• Common stock shares issued 39,598,900, $0.01 par value, paid-in capital in excess of par value, $640,078,000.

• Retained earnings deficit balance, ($25,436,000).

• Treasury stock shares held 2,549,041, cost $38,235,615.

During the period, Gfeller issued 15,000 shares for $16.50 per share and reissued 188,549 treasury stock shares at $19.00 per share. Gfeller had a net income of $77,508,000 during fiscal 2010 and declared dividends of $23,719,000.

Determine the ending balances of the shareholders’ equity accounts.

 

Assume you have recently been hired to provide investment advice to the manager of Encampment Company. The company has excess cash that it needs to invest, but the manager does not understand how to read financial statements.

Write a memo to the manager describing how to read and interpret a statement of owners’ equity and a balance sheet.

 

Solution:

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