The stockholders\' equity section of the balance sheet for Atkins Company at Dec

ID: 2444159 • Letter: T

Question

The stockholders' equity section of the balance sheet for Atkins Company at December 31, 2011, is as follows.

Stockholders' Equity
Paid-in capital
Preferred stock, ? par value, 6% cumulative,
50,000 shares authorized,
40,000 shares issued and outstanding $400,000
Common stock, $10 stated value,
150,000 shares authorized,
60,000 shares issued and ? outstanding 600,000
Paid-in capital in excess of par—preferred 30,000
Paid-in capital in excess of par—common
200,000

Total paid-in capital $1,230,000
Retained earnings 250,000
Treasury stock, 2,000 shares (50,000)
Total stockholders' equity
$1,430,000

Note: The market value per share of the common stock is $25, and the market value per share of the preferred stock is $12.

Requirement 1:
What is the par value per share of the preferred stock? (Omit the "$" sign in your response.)

Par value per share $ 10

Requirement 2:
What is the dividend per share on the preferred stock? (Round your answer to 1 decimal place. Omit the "$" sign in your response.)

Dividend per share $

Requirement 3:
What is the number of common stock shares outstanding?

Number of common shares outstanding

Requirement 4:
What was the average issue price per share (price for which the stock was issued) of the common stock? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Average issue price per share $

Requirement 5:
What is the difference between the average issue price and the market price of the common stock. (Omit the "$" sign in your response.)

Difference in price $

Requirement 6:
(Leave no cells blank - be certain to enter "0" wherever required. Round your Market price per share to 2 decimal places. Omit the "$" sign in your response.)
(a)
If Atkins declared a 2-for-1 stock split on the common stock, how many shares would be outstanding after the split?

Number of shares outstanding after the split

(b)
What amount would be transferred from the retained earnings account because of the stock split?

Amount to be transferred $

(c)
Theoretically, what would be the market price of the common stock immediately after the stock split?

Market price per share $

Explanation / Answer

Paid-in capital

Preferred Stock, $ par value, 6% cumulative

50,000 shares authorized,

40,000 shares issued and outstanding

$400,000

Common stock, $5 par value, authorized

60,000 shares issued and $10 per share

$600,000

Paid-in capital in excess of par - preferred

$30,000

Paid-in capital in excess of par - common

$200,000

Total Paid-in capital

$1,230,000

Retained earnings

$250,000

Less: Treasury Stock, 2,000 shares ($50,000)

($50,000)

Total Stockholder's Equity

$1,430,000

Preferred Stock, $10 par value, 6% cumulative,

50,000 shares authorized, 40,000 shares issued and

Outstanding $400,000

Common stock, $10 stated value, 150,000 shares

Authorized, 60,000 shares issued and outstanding $600,000

Paid-in-capital in excess of par – Preferred $30,000

Paid-in capital in excess of par – Common $20,000

Requirement 1: Par value per Preferred Share = [40,000 preferred shares * $10 per share] = $400,000

Par value per preferred share = $10 per share

Requirement 2:

Dividend per share on the preferred stock =$10 * 6%

Dividend per share on the preferred stock = $0.60 per share

Requirement 3:

Number of common stock shares outstanding = 60,000 shares