Changes in stockholders’ equity

Changes in stockholders’ equity

P4. Changes in stockholders’ equity Listed below are the equity sections of balance sheets for years 2008 and 2009 as reported by Mountain Air Ski Resorts, Inc. The overall value of stockholder’s equity has risen from $2,000,000 to $7,500,000. Use the statements to discover how and why this occurred.

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Mountain Air Ski Resorts, Inc.

Balance Sheets (partial)

Stockholders’ equity20082009
Common stock ($1.00 par)
Authorized – 5,000,000
Outstanding – 1,500,000 shares in 2009$ 1,500,000
– 500,000 shares in 2008$ 500,000
Paid-in capital in excess of par500,0004,500,000
Retained earnings1,000,0001,500,000
Total stockholders’ equity$ 2,000,000$ 7,500,000

The company paid total dividends of $200,000 during fiscal 2009.

a. What was Mountain Air’s net income during fiscal 2009?

b. How many new shares did the corporation issue and sell during the year?

c. At what average price per share did the new stock sold during 2009 sell?

d. At what price per share did Mountain Air’s original 500,000 shares sell?

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