Question

Following is the stockholders’ equity section of the Saints, Inc. 20X8 balance sheet ($ in thousands):...

Following is the stockholders’ equity section of the Saints, Inc. 20X8 balance sheet ($ in thousands):

20X8

Common stock, $0.0001 par value (shares authorized—240,000,000, shares issued – 73,549,872)

7

Additional paid-in capital

551,004

Treasury stock, at cost 4,223,670 shares

(218,692)

Retained earnings

1,063,633

Accumulated other comprehensive loss

    (1,345)

Total shareholders’ equity

$1,394,607

Required:.

a. Saints has 240 million shares of common stock authorized, but only 73,549,872 shares issued. Why is there a difference between these two numbers?

b. Verify that Saints’ common stock balance is $7 thousand.

c. How many common shares did Saints have outstanding at the end of the year?

d. Calculate the average cost at which Saints repurchased its common stock.

Business   Accounting   
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Answer #1

Ques 1:
The number of shares authorized is formally set forth in an operating agreement created in conjunction with a firm’s initial public offering. It can only be increased or decreased by an affirmative shareholder vote. A firm can issue any number of shares up to the amount formally authorized.Issued shares includes both those outstanding and those in the treasury stock

Ques 2:
Common stock: 73,549,872 shares issued × $0.0001 par value = $7,354 rounded to $7 thousand.

Ques 3: Common shares outstanding = common shares issued – treasury shares repurchase = 73,549,872 – 4,223,670 = 69,326,202 outstanding

Ques 4:
$218,629,000 / 4,223,670 = $51.78 per share

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