Chapter 1 (introduction to Corporate Finance); Chapter 2 (Financial Statements)

Question

Chapter 1 (introduction to Corporate Finance); Chapter 2 (Financial Statements) For questions #6-18, refer to the following financial information for Gannon Insurance. ALL CALCULATIONS MUST BE SHOWN TO EARN POSITIVE RATING. PLEASE SHOW ALL WORKING CLEARLY. THANK YOU 2016 2017 BALANCE SHEETS: Assets: Cash Accounts Receivable Inventory Fixed Assets, net Total Assets 120,000 520,000 305,000 410.000 1,355,000 160,000 620,000 290,000 510.000 1,580,000 Liabilities and Equity: Accounts Payable Long-term Debt Common Stock Retained Earnings Total Liabilities and Equity 350,000 500,000 50,000 455,000 1,355,000 $375,000 625,000 75,000 505,000 1,580,000 INCOME STATEMENT: Revenue Cost of Goods Sold General and Administrative Depreciation Expense Earnings Before Interest and Taxes Interest Expense Pretax Net Income Income Taxes Net Income 3,500,000 2,275,000 515,000 120,000 590,000 40,000 550,000 167,000 383,000 10. Assuming that Gannon did not buy back or redeem any of its shares, how much new common stock did it issue in 2017?

Explanation / Answer

$25,000

Common stock issued = Closing stock of common stock - Opening stock of common stock

= 75,000 - 50,000

= 25,000

Common stock increased by 25,000 during 2017, which means shares worth $ 25,000 were issued during the period.

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