Question

logitech begins business on january 1st 2022 by issuing 5,000 shares of $1 par common stock for $6 per share. on january 2nd the company repurchased 100 shares for $10 per share. what is the net effect on cash to logitech after those two transactions (if negative cash amount, enter answer as a negative).

Answer 1

Logitech has a net cash inflow of $29,000 after issuing new shares and then repurchasing a portion of them.

Step-by-step explanation:

The net effect on cash to Logitech after issuing and repurchasing shares of stock is a net cash inflow.

On January 1st, 2022, Logitech issued 5,000 shares at $6 per share.

Therefore, the cash inflow from the issuance is 5,000 shares × $6/share = $30,000.

On January 2nd, the company repurchased 100 shares at $10 per share, leading to a cash outflow of 100 shares × $10/share = $1,000.

The net effect on Logitech's cash is the cash inflow minus the cash outflow, which is $30,000 - $1,000 = $29,000.