Question

Current Attempt in Progress Blue Corp., a private corporation, received its articles of incorporation on January 3, 2024. It is authorized to issue an unlimited number of common shares and $1 preferred shares. It had the following share transactions during the year: Jan. 12 24 July 11 Oct. 1 Issued 45,500 common shares for $5 per share. Issued 860 common shares in payment of a $5,296 bill for legal services. Issued 910 preferred shares for $25 per share. Issued 9,100 common shares in exchange for land. The land's fair value was estimated to be $50,050, Blue's accountant estimated that the fair value of the shares issued might be as high as $6 per share.

Answer 1

Calculating net profit from stock transactions involves deducting the purchase cost, including any fees, from the selling price. For majority control in company decisions, more than 50% of shares need to be owned. The examples above showcase these calculations.

Step-by-step explanation:

The discussion revolves around share transactions and stock valuations for a private corporation, calculation of net profits from stock transactions, and voting power among shareholders in a company. Calculating net profit from stock transactions involves subtracting the total purchase price and any associated transaction fees from the total selling price obtained by multiplying the current stock price by the number of shares sold. To change a company's top management through a vote, a majority of shares must be owned. If two investors agree to vote together, their combined shares must exceed 50% of the total outstanding shares to ensure they can control the outcome of the vote.

Example: To calculate the net profit from a stock transaction for Nike shares:

• Purchase price: 1000 shares at $24.50 = $24,500
• Selling price: 1000 shares at $39.75 = $39,750
• Initial transaction fee: $9.99
• Final transaction fee: $9.99 (assumed the same for selling)
• Total fees: $9.99 + $9.99 = $19.98
• Net profit: $39,750 - $24,500 - $19.98 = $15,230.02