Problem 1. The stockholders\' equity section of MaiStyle Corporation\'s balance
ID: 2509510 • Letter: P
Question
Problem 1. The stockholders' equity section of MaiStyle Corporation's balance sheet at December 31 is presented here. MAISTYLE CORPORATION Balance Sheet (partial) Stockholders' equity Paid-in capital Preferred stock, cumulative, 10,000 shares authorized,$900,000 6,000 shares issued and outstanding Common stock, no par; 750,000 shares authorized 600,000 shares issued 1,800,000 2,700,000 1,158,000 3,858,000 Less: Treasury stock (8,000 common shares)(32,000) $3,826,000 Total paid-in capital Retained earnings Total paid-in capital and retained earnings Total stockholders' equity Instructions 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? (e) What is the par value of the preferred stock? (d) If the annual dividend on preferred stock is $36,000, what is the dividend rate on preferred stock? (e) If dividends of $72,000 were in arrears on preferred stock, what would be the balance reported for retained earnings?Explanation / Answer
a) MaiStyle Corporation has issued 600,000 shares in first instance and took back 8000 common shares from shareholders. Net Outstanding common stock for the firm will be 592,000 (600,000-8000).
b) Stated value for common stock will be considered as 1,800,000/600,000 i.e. $3 per common stock. Since there is no additional paidin capital is stated in question, $3 will stand as the Par value.
c) Par value of preferred stock is $150. ($900,000/6,000). Paid-In capital for Preferred stock is $900,000 while the number of stock is 6,000.
d) Remember, annual dividend is compured on Face value/Par value/ Stated value. If annual dividend is $36,000 for Preferred stock, the dividend rate comes to 4% (36,000/900,000*100)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.