Exercise 11-4 The stockholders\' equity section of Pina Colada Corp.\'s balance

Question

Exercise 11-4 The stockholders' equity section of Pina Colada Corp.'s balance sheet at December 31 is presented here. PINA COLADA CORP. Balance Sheet (partial) Stockholders' equity Paid-in capital Preferred stock, cumulative, 10,333 shares authorized, 6,200 shares issued and outstanding $ 620,000 Common stock, no par, 742,241 shares authorized, 574,000 shares issued 1,722,000 Total paid-in capital 2,342,000 Retained earnings 1,175,000 Total paid-in capital and retained earnings 3,517,000 Less: Treasury stock (7,900 common shares) 42,133 Total stockholders' equity $3,474,867 From a review of the stockholders' equity section, answer the following questions. (a) How many shares of common stock are outstanding? Common stock outstanding shares (b) Assuming there is a stated value, what is the stated value of the common stock? The stated value of the common stock per share

Explanation / Answer

Answer a. Common Stock Outstanding = 574,000 Shares (Shares Issued) - 7,900 (Treasury Shares) Common Stock Outstanding = 566,000 shares Answer b. Stated Value of Common Stock = $1,722,000 (Common Stock) / 574,000 (Shares Issued) Stated Value of Common Stock = $3 per share Answer d. Dividend Rate - Preferred Stock = $37,200 (Annual Dividend) / $620,000 (Preferred Stock) Dividend Rate - Preferred Stock = 6% Answer e. Retained Earning Balance = $1,175,000

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