The following is related to the shareholders' equity of Adanac Limited on January 1:
Common shares, 150,000 authorized, 14,000 shares issued.........................$490,000
Contributed surplus-reacquisition of common shares.................................12,000
Retained earnings...........................................................................220,000
During the year, the following transactions related to common shares occurred in the order listed:
1. Reacquired 600 shares at $44 per share.
2. Issued 3,600 shares at $47 per share.
3. Issued 1,000 shares at $64.50 per share.
4. Reacquired 1,200 shares at $58 per share.
5. Reacquired 1,500 shares at $36 per share.
Instructions
(a) Calculate the number of shares authorized and issued at the end of the year.
(b) Determine the ending balances in each of the following accounts: Common Shares; Contributed Surplus-Reacquisition of Common Shares; and Retained Earnings.
Taking It Further
Why do companies report the number of shares issued? The number of shares authorized?