The stockholders\' equity section of Concord Corporation\'s balance sheet at Dec

Question

The stockholders' equity section of Concord Corporation's balance sheet at December 31 is presented here CONCORD CORPORATION Balance Sheet (partial) Stockholders' equity Paid-in capital Preferred stock, cumulative, 11,333 shares authorized, 6,800 shares issued and outstanding $ 707,200 2,845,000 3,552,200 1,184,000 4,736,200 37,333 $4,698,867 Common stock, no par, 735,776 shares authorized, 569,000 shares issued Total paid-in capital Retained earnings Total paid-in capital and retained earnings Less: Treasury stock (7,000 common shares) Total stockholders' equity From a review of the stockholders' equity section, answer the following questions (a) How many shares of common stock are outstanding? Common stock outstanding (b) Assuming there is a stated value, what is the stated value of the common stock? The stated value of the common stock shares per share (c) What is the par value of the preferred stock? The par value of the preferred stock (d) If the annual dividend on preferred stock is $49,504, what is the dividend rate on preferred stock? The dividend rate per share (e) If dividends of $75,700 were in arrears on preferred stock, what would be the balance reported for retained earnings? The Retained Earnings balance

Explanation / Answer

Answer 1(a) Common stock outstanding = 569000 shares Answer 1(b) The stated value of the common stock $5 per share. ($2845000/569000 shares) Answer 1(c) The par value of the preferred stock $104 per share. ($707200 / 6800 shares) Answer 1(d) The dividend rate = $49504 / $707200 = 7% Answer 1(e) The retained earning balance = $1184000 - $75700 = $11,08,300 Answer 2 Effects of the alternative actions on the Company's stockholders equity and outstanding shares Cullumber Company's Balance Sheet Before Action After Stock Dividend After Stock Split Stockholders Equity Paid in capital $656,000 $742,100 $656,000 Retained Earnings $392,000 $305,900 $392,000 Total Stockholders Equity $1,048,000 $1,048,000 $1,048,000 Outstanding Shares 82000 87740 164000 No.of shares issued under Stock dividend = 7% * 82000 shares = 5740 shares Amount to be deducted from retained earnings in case of stock dividend = 5740 shares * $15 = $86,100

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