Question

The authorized share capital of the Alfred Cake Company is 110,000 shares. The equity is currently...

The authorized share capital of the Alfred Cake Company is 110,000 shares. The equity is currently shown in the company’s books as follows:

Common stock ($2 par value) $ 73,000
Additional paid-in capital 23,000
Retained earnings 43,000
Common equity $ 139,000
Treasury stock (2,000 shares) 17,000
Net common equity $ 122,000

a. How many shares are issued?

b. How many shares are outstanding?

c. How many more shares can be issued without the approval of shareholders?

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Answer #1

a) Calculation of the shares issued :-

number of shares issued = par value of issued stock / par value per share = 73,000 / 2 = 36,500 shares.

b ) Shares oustanding :-

treasury stock means required stock by company.The result of treasury stock, the total number of outstanding shares on open market decreases.

Shares outstanding = Issued shares - treasury share = 36,500 - 2000 = 34,500 shares

c ) The firm can issue up to a total of 110,000 shares, Because 36,500 shares issued,Another 73,500 shares can be issued without approval from shareholders.

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