Question

Q.1 The authorized share capital of the Alfred Cake Company is 150,000 shares.

The equity is currently shown in the company’s books as follows:

Common stock ($1 par value)               $75,000

Additional paid-in capital                         25,000

Retained earnings                                   45,000

Common equity                                   $145,000

Treasury stock (2,000 shares)                 19,000

Net common equity                              $126,000

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?

Q.2 Common Products has just made its first issue of stock. It raised $2.7 million by selling 300,000 shares of stock to the public. These are the only shares outstanding. The par value of each share was $1. Complete the following table:

Common stock (par value):         

Additional paid-in capital:             

Retained earnings:         

Net common equity:               $3,200,000

Q.3 If there are 12 directors to be elected and a shareholder owns 100 shares, calculate the maximum number of votes that he or she can cast for a favorite candidate under each of the voting methods.

| |Maximum |

| |Number of |

| | Votes |

a. Majority voting | |

b. Cumulative voting | |

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