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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

$300,000

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

1,200,000

Total paid-in capital

1,500,000

Retained earnings

1,858,000

Total paid-in capital and retained earnings

3,358,000

Less: Treasury stock (75,000 common shares)

75,000

Total stockholders' equity

$3,283,000

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

(a) 

How many shares of common stock are outstanding?

(b) 

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

(c) 

What is the par value of the preferred stock?

(d) 

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

(e) 

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


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(Top Tutor) Daniel C.
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School: Duke University
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