The stockholders’ equity section of Leyland Corporation’s balance sheet at Decem
ID: 2450800 • Letter: T
Question
The stockholders’ equity section of Leyland Corporation’s balance sheet at December 31 is presented here.
$ 656,500
2,206,400
2,862,900
1,208,000
4,070,900
(32,747
)
$4,038,153
From a review of the stockholders’ equity section, answer 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 $45,955, what is the dividend rate on preferred stock?
(e) If dividends of $78,800 were in arrears on preferred stock, what would be the balance reported for retained earnings?
Balance Sheet (partial) Stockholders’ equity Paid-in capital Preferred stock, cumulative, 10,833 shares authorized, 6,500 shares issued and outstanding
$ 656,500
Common stock, no par, 713,276 shares authorized, 551,600 shares issued2,206,400
Total paid-in capital2,862,900
Retained earnings1,208,000
Total paid-in capital and retained earnings4,070,900
Less: Treasury stock (6,140 common shares)(32,747
)
Total stockholders’ equity$4,038,153
Explanation / Answer
Shares of common stocks outstanding = 551600-6140 i.e 545460 shares
Stated value of commom stock = 2206400/551600 i.e 4 per share
Par value of preferred stock = 656500/6500 i.e 101 per share
Dividend rate on preferred stock = 45955/656500 i.e 7%
Retained earnings balance = 1208000-78800 i.e 1129200
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