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27 December, 07:44

The 2016 annual report for Mega Mills disclosed that 1 billion shares of common stock have been authorized. At the end of 2015, 800 million shares had been issued and the number of shares in treasury stock was 109 million. During 2016, the only common share transactions were that 17 million common shares were reissued from treasury and 28 million common shares were purchased and held as treasury stock. Required: Determine the number of common shares (a) issued, (b) in treasury, and (c) outstanding at the end of 2016. (Enter your answers in millions.)

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  1. 27 December, 07:46
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    a. The number of common shares issued is 800 million shares

    b. The number of common shares in treasury is 120 million shares

    c. The number of common shares outstanding at the end of 2016 is 680 million shares

    Explanation:

    a. According to the given data At the end of 2015, 800 million shares had been issued, therefore, the number of common shares issued is 800 million shares

    b. In order to calculate the number of common shares in treasury we would have to make the following calculation:

    number of common shares in treasury=number of shares in treasury stock-common shares reissued from treasury+common shares purchased

    number of common shares in treasury=109 million-17 million+28 million

    number of common shares in treasury=120 million shares

    c. To calculate the number of common shares outstanding at the end of 2016 we would have to make the following calculation:

    number of common shares outstanding at the end of 2016 = issued stock-treasury stock

    number of common shares outstanding at the end of 2016=800 million-120 million

    number of common shares outstanding at the end of 2016=680 million
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