The Following Data Has Been Collected About a Company's Shareholders

question 66

Multiple Choice

The following data has been collected about a company's shareholders' equity accounts: Share Capital - Ordinary $10 par value 20,000 shares
Authorized and 10,000 shares issued, 1,000 shares in
Treasury……………………………………………………… $100,000
Share Premium - Ordinary………………………………………..... 50,000
Retained earnings…………………………………………………… 25,000
Treasury shares……………………………………………………… 11,500
The treasury shares were all purchased at the same price.
The cost per share of the treasury shares is:

• A) $1.15.
• B) $1.28.
• C) $11.50.
• D) $10.50.
• E) $10.00.

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Definitions:

Rights Offering

A form of raising capital where a company offers existing shareholders the right to purchase additional shares at a discounted price before offering them to the public.

Price-earnings Ratio

The price-earnings ratio (P/E ratio) is a valuation metric comparing a company's current share price to its per-share earnings, helping investors assess the value of a stock.

Value Of A Right

The theoretical financial value of a right given to existing shareholders to purchase additional shares at a discount before a new issuance.

Rights Offering

A method by which a company offers new shares to its existing shareholders in proportion to their current shareholding, typically at a discount to the current market price.