Question

# The stockholders' equity section of Wildhorse Co. balance sheet at December 31 is presented here: WILDHORSE...

The stockholders' equity section of Wildhorse Co. balance sheet at December 31 is presented here:

 WILDHORSE CO. Balance Sheet (partial) Stockholders' equity Paid-in capital Preferred stock, cumulative, 11,000 shares authorized, 6,000 shares issued and outstanding \$600,000 Common stock, no par, 750,000 shares authorized, 600,000 shares issued 6,000,000 Total paid-in capital 6,600,000 Retained earnings 1,450,000 Total paid-in capital and retained earnings 8,050,000 Less: Treasury stock (5,000 common shares) 41,000 Total stockholders' equity \$8,009,000

From a review of the stockholders' equity section, answer the following questions.

How many shares of common stock are outstanding?

 Outstanding shares enter a number of shares shares

Assuming there is a stated value, what is the stated value of the common stock?

 Stated value of common stock \$enter a dollar amount per share per share

What is the par value of the preferred stock?

 Par value of preferred stock \$enter a dollar amount per share per share

If the annual dividend on preferred stock is \$31,000, what is the dividend rate on preferred stock? (Round answer to 2 decimal places, e.g. 52.75.)

 Dividend rate on preferred stock enter dividend rate on preferred stock in persentages %

If dividends of \$64,000 were in arrears on preferred stock, what would be the balance reported for retained earnings?

 Balance for Retained Earnings \$enter a dollar amount

Solution:

a)Calculation of number of shares of common stock outstanding

Opening no. of shares outsatanding=600,000 shares

Less:Bought back(Treasury Stock)=5000 shares

No. of shares oustanding 595,000 shares

Treasury stock refers to previously oustanding stock that is bought back.

b)Calculation of stated value of Common stock

Stated Value=\$6,000,000/600000 shares

=\$10 per share

c)Calculation of Par value of  Preferred stock

Par Value=Amount /No. of shares

=\$600,000/ 6,000 shares

=\$100 per share

d)Calculation of dividend rate on preferred stock

Dividend Per share=\$31,000/60000 shares

=\$5.17

Dividend Rate=(Dividend Per share/Par value per share)*100

=(\$5.17/\$100)*100

=5.17%

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