Stockholders Equity Section of the Balance Sheet

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Business Finance

Description

Answer the following questions in 1,050 words using the Lachlin Corporation Balance Sheet located on p. 575 of Financial Accounting:

  • 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 $36,000, what is the dividend rate on preferred stock?
  • If dividends of $72,000 were in arrears on preferred stock, what would be the balance reported for retained earnings?

Use the Week 4 Excel® spreadsheet

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Name Section Date Exercises 11-4 E11-4 Lachlin Corporation (a) (b) (c) (d) (e) 627 xercises 11-4 627 $ 600,000 LACHLIN CORPORATION Balance Sheet (partial) Stockholders' equity Paid-in capital Preferred stock, cumulative, 10,000 shares authorized, 6,000 shares issued and outstanding Common stock, no par, 750,000 shares authorized, 580,000 shares issued Total paid-in capital Retained earnings Total paid-in capital and retained earnings Less: Treasury stock (6,000 common shares) Total stockholders' equity 2,900,000 3,500,000 1,158,000 4,658,000 32,000 $4,626,000
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Explanation & Answer

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Running head: LACHLIN CORPORATION

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Lachlin Corporation
Instructor name
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Date

LACHLIN CORPORATION

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Lachlin Corporation
Introduction
The Lachlin Corporation balance sheet provides and information about stockholders
equity which mainly includes paid in capital, retained earnings, total paid in capital and paid
earnings and total stockholders’ equity. Paid-in capital is the measure of capital "paid in" by
financier during preferred or common stock issuances, as well as the par value of the shares
themselves. Paid-in capital speaks to the assets increased by the company from value, and not
from ongoing operations. Paid-in capital likewise alludes to a company asset report section
recorded under stockholder's value, regularly appeared close by the monetary record passage for
extra paid-in capital. (“Paid In Capital”, n.d.)
The term retained earnings alludes to a partnership's total net income (from the date of
incorporation to the present accounting report date) minus the total measure of profits
proclaimed. A setup organization that has been gainful for a long time will regularly have a vast
credit adjust in its Retained Earnings account, every now and again exceeding the paid-in capital
from investors. On the off chance that, then again, an enterprise has encountered huge net
misfortunes since it was framed, it could have negative retained earnings (announced as a charge
adjust instead of the typical credit adjust in its Retained Earnings account)....


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