PROBLEM #4 The following accounts and their balances appear in the ledger of Rap

Question

PROBLEM #4 The following accounts and their balances appear in the ledger of Raptor, Inc. on December 31, 2016. Preferred 2% Stock, $100 Par, 10,000 shares authorized Paid-In Capital in Excess of Par-Preferred Stock Common Stock, $5 Par, 350,000 shares authorized Paid-In Capital in Excess of Par- Common Stock Retained Earnings Treasury Stock-Common (4,000 shares at cost) s 400,000 65,000 500,000 175,000 3,152,500 100,000 1. How many shares of preferred stock have been issued? 2. 3. 4. 5. 6. What is the total dollar amount of Stockholders' Equity? 7. What amount is needed to pay the preferred stock annual How many shares of preferred stock are outstanding? How many shares of common stock have been issued? How many shares of common stock are outstanding? What was the cost per share of the treasury stock? dividend?

Explanation / Answer

Answer

Preferred Stock Value = $400,000
par Value of Preferred Stock = $100 per share

Hence, No. of preference shares Issued = $400000 / $100 = 4000 shares

Outstanding no. of preference shares = 4000 shares, same as Issued.

Common Stock Value = $500,000

Par Value of common stock = $5

Hence, no. of common stock issued = 500000 / 5 =100,000 shares

Common Stock outstanding = Issued – Treasury common stock
= 100000 shares – 4000 shares = 96,000 shares

Value of Treasury Stock = $100000
No. of Treasury Stock = 4000 shares
Cost per share of treasury stock = $100000/4000 shares = $25 per share

Total Dollar amount of Stockholder’s Equity = Total contributed capital – Treasury Stock

=$400000 + $65000 + $500000 + $175000 + $3152500 - $10000 = $4,291,500

Preferred Stock Value = $400000
Dividend rate = 2%

Amount of annual dividend = 400000 x 2% = $8,000

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