1. Equity Question: Metzger Steel Corporation (MSC) is a small specialty steel manufacturer located in northern Alabama that has been owned by the Metzger family for several generations. Arnold Metzger III is a major shareholder in MSC by virtue of having inherited 200,000 shares of common stock in the company. Previously, Arnold has not shown much interest in the business because of his enthusiasm for archaeology, which takes him to far parts of the world. However, when he received minutes of the last board of directors meeting, he questioned a number of transactions involving the stockholders' equity of MSC. He asks you, as a person with knowledge of accounting and a prospective Stern grad, to help him interpret the effect of these transactions on his interest in MSC. First, you note that at the beginning of 2008, the stockholders' equity of MSC appeared as follows Metzger Steel Corporation Stockholders' Equity January 1, 2008 Contributed Capital (in thousands) $10,000 25,000 $35,000 Retained Earnings 20,000 Total Stockholders' Equity $55,000 Then you read the relevant parts of the minutes of the December 15, 2008, meeting of the board of directors of MSC: Item A: The president reported the following transactions involving the company's stock during the last quarter: October 15. Sold 500,000 shares of authorized common stock through the investment banking firm of B. Abbott at a net price of $50 per share. Common Stock-$10 par value, 5,000,000 shares authorized, 1,000,000 shares issued and outstanding Paid-in Capital in Excess of Par Value, Common Total Contributed Capital November 1. Purchased 100,000 treasury shares from Sharon Metzger at a price of $55 per share. Item B: November 15-16: On November 15th, the board declared a 2-for-1 stock split (accomplished by halving the par value, doubling each stockholder's shares, and increasing authorized shares to 10,000,000). This was followed by a 10 percent stock dividend. The market value of Metzger stock on the board meeting date after the stock split was estimated to be $30. On November 16th, the board declared and paid a cash dividend of $2.00 per share. Item C: The chief financial officer stated that the company reported a net income of $4,000,000 for the year ended December 31st, 2008. Required: For each of these transactions, indicate the effect on Capital Stock at Par, Paid in Excess of Par, Retained Earnings, Treasury Stock, Total Stockholders' Equity, Shares Issued, and Shares Outstanding. Use the following Table. Don't leave any blank spaces, and indicate "+" or "-" to indicate increases and decreases and None if there is no effect. i. ii. Did the above events change Arnold Metzger III's percentage of ownership of the company during the year, and by how much?