Question
In: Accounting
The stockholders’ equity section of Indigo Corporation’s balancesheet at December 31 is presented here.Balance...
The stockholders’ equity section of Indigo Corporation’s balance sheet at December 31 is presented here.
Balance Sheet (partial)
Stockholders' equity
Paid-in capital
Preferred stock, cumulative, 11,800 shares authorized, 7,100 shares issued and outstanding $ 710,000
Common stock, no par, 725,000 shares authorized, 555,000 shares issued 1,665,000
Total paid-in capital 2,375,000
Retained earnings 1,151,000
Total paid-in capital and retained earnings 3,526,000
Less: Treasury stock (7,000 common shares) 37,300
Total stockholders' equity $3,488,700
From a review of the stockholders' equity section, answer the following questions.
(a) How many shares of common stock are outstanding? Common stock outstanding 547900 shares
(b) Assuming there is a stated value, what is the stated value of the common stock? The stated value of the common stock per share
(c) What is the par value of the preferred stock? The par value of the preferred stock per share
(d) If the annual dividend on preferred stock is $49,700, what is the dividend rate on preferred stock? The dividend rate
(e) If dividends of $71,400 were in arrears on preferred stock, what would be the balance reported for retained earnings? The Retained Earnings balance
Solutions
Expert Solution
| Answer | ||
| a | Common stock outstanding = 555000-7000= | 548000 |
| b | Stated value = 1665000/555000= | $ 3 |
| c | Par value = 710000/7100= | $ 100 |
| d | Dividend rate = 49700/710000= | 7% |
| e | Retained earnings balance = 1151000-71400= | $1,079,600 |
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