The stockholders’ equity section of Leyland Corporation’s balance sheet at Decem

Question

The stockholders’ equity section of Leyland Corporation’s balance sheet at December 31 is presented here.

$ 646,400

2,206,400

2,852,800

1,195,700

4,048,500

(37,547

)

$4,010,953

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

(a) How many shares of common stock are outstanding?

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

(c) What is the par value of the preferred stock?

(d) If the annual dividend on preferred stock is $45,248, what is the dividend rate on preferred stock?

(e) If dividends of $74,500 were in arrears on preferred stock, what would be the balance reported for retained earnings?

LEYLAND CORPORATION
Balance Sheet (partial) Stockholders’ equity    Paid-in capital       Preferred stock, cumulative, 10,667 shares authorized, 6,400 shares issued and outstanding

$ 646,400

      Common stock, no par, 713,276 shares authorized, 551,600 shares issued

2,206,400

   Total paid-in capital

2,852,800

   Retained earnings

1,195,700

   Total paid-in capital and retained earnings

4,048,500

   Less: Treasury stock (7,040 common shares)

(37,547

)

Total stockholders’ equity

$4,010,953

Explanation / Answer

LEYLAND Corporation Details Amt $ a Common stock shares issued          551,600 nos Less Treasury stock              (7,040) nos No of Common Stocks Outstanding          544,560 nos b Common Stock no par value      2,206,400 No of common stocks          551,600 Stated Value per common stock= $             4.00 c Preferred stock par value total          646,400 Preferred stock isuued               6,400 Par value per Preferred stock= $        101.00 d Annual Dividend preferred stock            45,248 Preferred stock par value total          646,400 Dividend rate preferred share= 7.00% e Preferred dividend arrear              74,500 Retained earning balance      1,195,700 If Preferred dividend not declared then it will be shown as Balance Sheet footnote without any   arrear provision in Liability If the Preference dividend is   declared. Then there will be a   Cumulative preference dividend Liability of $74500 and the retained earning will   reduce by 74500 So Retained earning balance in   that case will be $1195700-$74500=      1,121,200

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