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timer Asked: Jun 24th, 2015

Question Description

The stockholders' equity section of Able Corporation at December 31 is as follows.

Able Corporation

Balance Sheet (partial)

Paid-in capital

Preferred stock, cumulative, 10,000 shares authorized, 5,000 shares issued and outstanding


Common stock, no par, 750,000 shares authorized, 600,000 shares issued


Total paid-in capital


Retained earnings


Total paid-in capital and retained earnings


Less: Treasury stock (75,000 common shares)


Total stockholders' equity


From a review of the stockholders' equity section, as chief accountant, write a memo to the president of the company answering the following questions.


How many shares of common stock are outstanding?


Assuming there is a stated value, what is the stated value of the common stock?


What is the par value of the preferred stock?


If the annual dividend on preferred stock is $30,000, what is the dividend rate on preferred stock?


If dividends of $60,000 were in arrears on preferred stock, what would be the balance in Retained Earnings?

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