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The corporate charter of Luney Corporation allows the issuance of a maximum of 100,000 shares of common stock. During its first two years of operations, Luney sold 70,000 shares to shareholders and reacquired 7,000 of these shares. After these transactions, how many shares are authorized, issued, and outstanding?

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Answer:

Authorized share capital          = 100,000 shares

Issued share capital                   = 70,000 shares

Number of shares outstanding  = 70,000 - 7,000 = 63,000 shares

Explanation:

Authorized share capital is the maximum share capital allowed by law ie 300,000 shares.

Issued share capital is the part of authorized share capital offered to the public for subscription ie 70,000 shares

Outstanding shares are the number of shares remaining at year-end ie 70,000 - 7,000.

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