[jeff12]

I am learning accounts on my own,so I was trying to work on the balance sheet.I tried to answer couple of questions.I am not sure if I have the right answer.I am listing a part of the balance sheet and other stuff


Figure given is in millions:-

On the balance sheet under the stockholders equity account.I have the following data

consolidated balance sheet:

Stockholders Equity
1999 1998
common stock ( authorized 500,000,000 shares of $2.50 par 818 818
value each;issued 1999 and 1998:327,125,854)

additional paid in capital 1321 718
Retained Earnings 13445 12,887
Treasury stock at cost(shares 1999:103,844,216; (7010) (6647)
1998:106,749081)
Net stockholders Equity 8323 7429




Consolidated statements of stockholders equity:

1999 1998
Common Stock
Balance at beginning and end of year $818 $818

Treasury stock
Balance at the beginning of the year (6647) (5935)
purchases (429) (742)
sales of treasury shares in the open market 39 -
issuance to employees and employee plans 27 21
reclassifications related to put options - 9
balance at the end of the year (7010) (6647)




My questions are as follows

1)how many shares of common stock is the company authorized to issue?
My ans(authorized 500,000,000) as per the balance sheet,please correct me if I am wrong

2)How many shares of common stock has the company actually issued at December 31 1999?
ans( as per the balance sheet the combined figure of 1999 and 1998 issued shares is given
as:327,125,854.So I subtracted this combined figure from the data in 1998 which is
818000000 and that gives me:49087415,please correct me)

3)How many shares of common stock are outstanding at December 31,1999?
Ans(all I know is the formula to calculate the outstyanding shares,formula is
issued shares -outstanding shares=treasury shares.
How do we use this formula here to get an answer?

4) why do companies repurchase their own shares?

Ans)when the selling price of the share falls bellow the actuial cost of the share,secondly
when the company wants to distribute shares to its own employees.Please corect me if I am wrong



Can some expert answer these questions?


Thanks
Jeff

[morgaine300]

2)How many shares of common stock has the company actually issued at December 31 1999?
ans( as per the balance sheet the combined figure of 1999 and 1998 issued shares is given
as:327,125,854.So i subtracted this combined figure from the data in 1998 which is
818000000 and that gives me:49087415,please correct me)

I'm not sure why you're making this calculation. I don't see that 327,125,854 is a combined figure for the two years. It's the same figure for the two years. Furthermore, if the 327 million is combined, how can one year be 818 million? Think about that a sec. Also, the 818 million is the dollar amount par value in total of the stock, and the 327 million is the shares of stock. You cannot add and subtract two different types of numbers like like. (Relate this to: you have 3 shirts that cost $20 each. So what does subtracting 3 shirts from $20 mean? Nothing.)

The outstanding shares is the 327,125,854. And you can prove this further with:
327,125,854 * 2.50 par = $817,814,635 total dollar value. (Rounded gives you the 818.) The stock account is always listed at the par value.

3)How many shares of common stock are outstanding at December 31,1999?
Ans(all i know is the formula to calculate the outstyanding shares,formula is
issued shares -outstanding shares=treasury shares.
How do we use this formula here to get an answer?

If issued - outstanding = treasury, then is it also not true that issued - treasury = outstanding? ;)

4) why do companies repurchase their own shares?

Ans)when the selling price of the share falls bellow the actuial cost of the share,secondly
when the company wants to distribute shares to its own employees.Please corect me if i am wrong

Not sure where you got the thing about the selling price falling below the actual cost, but I also admit I've never worked for a large corporation and don't know all the ins and outs of why corporations do what they do. I've just never heard this specific reason. And you've not stated the reason -- only the condition. (i.e. Why?) Using to distribute to employees is one reason. Another common reason is if the amount outstanding is lowered, the earnings per share goes up. (If there's less outstanding, there's less to divide earnings among, and also less to pay dividends to.)

[morgaine300]

Hi guys,
i don't know what's wrong.when i type my question,i see it fine.But after posting it i don't see it correctly on the page.Can somebody tell me how to go about it?
thanks
Jeff12

Your questions are showing up fine. (And has been double-posted.) Or at least, this question is showing up. (I don't know if you asked others.) Is there just perhaps a delay before it shows up?

If you continue to have problems, go to the Forum Help under Forum Community. You can put a link to your posts there also.
https://www.askmehelpdesk.com/forum-help/