Please explain to me Item A and B only. I want to know what rules/formulas I would use for problems like these. Also please say from where you were able to get each number (what you used to calculate). 1. Equity Question: Metzger Steel Corporation (MSC) is a small specialty steel manufacturer located innorthern Alabama that has been owned by the Metzger family for several generations. Arnold Metzger III isa major shareholder in MSC by virtue of having inherited 200,000 shares of common stock in the company.Previously, Arnold has not shown much interest in the business because of his enthusiasm for archaeology,which takes him to far parts of the world. However, when he received minutes of the last board of directorsmeeting, he questioned a number of transactions involving the stockholders' equity of MSC. He asks you, asa person with a knowledge of accounting and a prospective Stern grad, to help him interpret the effect ofthese transactions on his interest in MSC. First, you note that at the beginning of 2008 the stockholders'equity of MSC appeared as followsMetzger Steel CorporationStockholders' EquityJanuary 1, 2008Contributed Capital (in thousands)Common Stock-$10 par value, 5,000,000 sharesauthorized, 1,000,000 shares issued and outstandingPaid-in Capital in Excess of Par Value, CommonTotal Contributed CapitalRetained EarningsTotal Stockholders' Equity$10,00025,000$35,00020,000$55,000Then you read the relevant parts of the minutes of the December 15, 2008 meeting of the boardof directors of MSC:Item A: The president reported the following transactions involving the company's stock duringthe last quarter:October 15. Sold 500,000 shares of authorized common stock through the investmentbanking firm of B. Abbott at a net price of $50 per share.November 1. Purchased 100,000 treasury shares from Sharon Metzger at a price of $55 per share.Item B: November 15-16: On November 15th, the board declared a 2 for 1 stock split (accomplished byhalving the par value, doubling each stockholder's shares, and increasing authorized shares to10,000,000). This was followed by a 10 percent stock dividend. The market value of Metzgerstock on the board meeting date after the stock split was estimated to be $30. On November 16th,the board declared and paid a cash dividend of $2.00 per share.Item C: The chief financial officer stated that the company reported a net income of $4,000,000 for theyear ended December 31st 2008. i.For each of these transactions, indicate the effect on Capital Stock at Par, Paid in Excess ofPar, Retained Earnings, Treasury Stock, Total Stockholders' Equity, Shares Issued andShares Outstanding. Use the following Table. Don't leave any blank spaces and indicate "+"or "-" to indicate increases and decreases and None if there is no effect.

The stockholders' equity represents the owner's claim to the business's net assets and it is…

Please explain to me Item A and B only. I want to know what rules/formulas I would use for problems like these. Also please say from where you were able to get each number (what you used to calculate).

Please explain to me Item A and B only. I want to know what rules/formulas I would use for problems like these. Also please say from where you were able to get each number (what you used to calculate).

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

Section: Chapter Questions

Problem 1RP

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