Questions 27-30 (Stockholders\' Equity The following data should be used in solv

Question

Questions 27-30 (Stockholders' Equity The following data should be used in solving Questions 27, 28, 29 and 30. Each of the questions is mutually exclusive of the other questions. Alpha Corporation has the following Shareholders' Equity section of the Balance Sheet at 1/1/2004: Preferred Stock, 10%, $100 Par Value, 10,000 shares $ 100,000 oo,o0 authorized, 1,000 issued, and outstanding Additional Paid In Capital /Preferred Stock Common Stock, $10 Par Value, 100,000 shares authorized, 240 240,000 500,000 50,000 shares issued and outstanding Additional Paid In Capital/ Common Stock Total Paid In Capital Retained Earnings Total Shareholders/ Equity S1,640,000 $ 3,640,000 0 0 Questions 27 (Stockholders' Equity): ssume Alpha sells 500 shares of Preferred Stock for $400 per share. What will be the dollar mount of the increase to Preferred Stock, APIC- Preferred Stock, and Retained Eamings? Increase RE 100/ 200,000 150,000 a. b. 50,000 500 shares 100 z 54 000 mne-samnleexam.htm

Explanation / Answer

Q27.

Increase in preferred stock = $100 * 500 =>$50,000

Increase in paid in capital of preferred stock = $300*500 =>$150,000.

q28.

e.none / decrease.

purchase of treasury stock will not have an impact on paid in capital.

But will decrease the total shareholders equity by the amount spent to acquire the treaury stock.

q29..

c.$15,000.

preferred share holders will be paid = total face value * stated percent =>$100,000*10% =>$10,000.

commonshare holders will receive = 50,000 shares * $0.10 per share

=>$5,000.

q30.

C.$7.00

EPS = (net income - preferred dividends) / number of common shares

=>($360,000 - 10,000) / 50,000

=>$7.00.

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