Chapter 1 Problem 10-26 to 28
Problem 10-26 Answer B
Sales price (50,000 x 10) 500,000
Cost of rights sold (10/100 x 3,600,000) 360,000
Gain on sale of rights 140,000
138
Problem 10-27 Answer B
Cost of rights (18/150 x 500,000) 60,000
Cost paid for new shares (2,500 shares x 90) 225,000
Total cost of new investment 285,000
Cost per share (285,000 / 2,500 shares) 114
Problem 10-28 Answer B
Cost of 2006 rights (4/100 x 180,000) 7,200
Cost of 2007 rights (4/100 x 330,000) 13,200
Total cost of rights 20,400
900 shares x 5 rights 4,500 rights
Cash paid (900 x 80) 72,000
Cost of rights exercised
2006 – 2,250 rights 7,200
2007 – 2,250 rights (2,250/3,750 x 13,200) 7,920
Total cost of 900 shares 87,120
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