The authorized share capital of the Alfred Cake Company is 100,000 shares. The equity is currently shown in the company's books as follows:

Common stock ($1 par value).................$60,000

Additional paid-in capital........................10,000

Retained earnings.................................30,000

Common equity.................................100,000

Treasury stock (2,000 shares)...................5,000

Net common equity...........................$95,000

a. Suppose that the company issues 10,000 shares at $4 a share. Which of the above figures would change?

b. What would happen to the company's books if instead it bought back 1,000 shares at $4 per share?

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Authorized share capital Common stock par value Treasury stock Number of shares Issued (a) Issue price (a) Number of shares bought back (b) Shares bought back at (b) S 1.00 2,000 shares 10,000 |shares S 4.00 per share 1,000.00 S 4.00 per share