3) Sundown Products had the following Stockholder\'s Equity section in its Decem

Question

3) Sundown Products had the following Stockholder's Equity section in its December 31, 2007 balance sheet: Sundown Products Statement of Stockholders' Equity As of December 31, 2007 Common Stock, $2 par value, 11,000 shares authorized Additional Paid in Capital Common Stock $ 8,468 21,170 Preferred Stock 5% cumulative, $25 par value, 1,000 authorized 11,250 1,350 (8,652) 48,854 82,440 Additional Paid In Capital Preferred Stock Treasury Stock, 1,236 shares Retained Earnings Total Stockholders' Equity Required: (10 points) 1. How many shares of common stock are classified as issued? 2. How many shares of common stock are classified as outstanding? 3. How many shares of preferred stock are outstanding? 4. What was the average selling price of a share of common stock? 5. If $7,500 worth of dividends were declared and paid, how much would go to the preferred st and how much would go to the common stockholders? 6. If $7,500 worth of dividends was declared and $3,000 in preferred dividends was in arrears, how much of the dividend would go to the common shareholder?

Explanation / Answer

Req 1: Common Stock capital   $ 8468 Par value per share   $ 2 per share Number of common shares issued ( 8468/2) = 4234 shares Req 2: Number of Common Share issued(as above) 4234 shares Less: Shares in treasury account 1236 shares Common shares outstanding 2998 shares Req 3: Preferred share Capital       $ 11,250 Par value per preferred share $ 25 Number of preferred stock ( 11250/25) = 450 preferred stock Req4: Total amount collected on 4234 issued common shares: Balance of common stock capital 8468 Add: paid in capital of common stock 21170 Total amount collected on 4234 shares: 29638 Number of common shares 4234 Average selling price per common share 7 per share

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