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

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)	$	67,000
Additional paid-in capital		17,000
Retained earnings		37,000
Common equity		121,000
Treasury stock (2,000 shares)		11,000
Net common equity	$	110,000

a.	How many shares are issued?

Number of shares issued

b.	How many are outstanding?

Outstanding shares

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

Number of shares issued

Explanation:

a.

Number of shares = par value of issued stock/par value per share

= $67,000/$2 = 33,500 shares

b.

Outstanding shares = issued shares − treasury stock

= 33,500 − 2,000 = 31,500 shares

c.

The firm can issue up to a total of 110,000 shares. Because 33,500 shares have been issued, another 76,500 shares can be issued without approval from shareholders.