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CA15-1 (Preemptive Rights and Dilution of Ownership) Wallace Computer Company held corporation. Eighty percent of the stock is held by Derek Wallace, president. Of the mo held by members of his family and 10% by Kathy Baker, a former officer who is now retir sheet of the company at June 30, 2014, was substantially as shown below. mpany is a small, close of the remainder, 10% is pow retired. The balance Cash Other Assets $ 22,000 450,000 $472,000 Liabilities and Stockholders' Equity Current liabilities $ 50,000 Common stock 250,000 Retained earnings 172,000 $472,000 Additional authorized common stock of $300,000 par value had never been issued. To strengthen the cod position of the company, Wallace issued common stock with a par value of $100,000 to himself at marbu cash. At the next stockholders' meeting, Baker objected and claimed that her interests had been injured Instructions (a) Which stockholder's right was ignored in the issue of shares to Derek Wallace? (b) How may the damage to Baker's interests be repaired most simply? ! (c) If Derek Wallace offered Baker a personal cash settlement and they agreed to employ you as an impartial arbitrator to determine the amount, what settlement would you propose? Present your calculations with sufficient explanation to satisfy both parties

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