The stockholders’ equity section of Bramble Corp.’s balance sheet at December 31

Question

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

$ 556,500

1,728,000

2,284,500

1,152,000

3,436,500

26,667

$3,409,833

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 $44,520, what is the dividend rate on preferred stock?

(e) If dividends of $75,600 were in arrears on preferred stock, what would be the balance reported for retained earnings?

BRAMBLE CORP.
Balance Sheet (partial) Stockholders’ equity    Paid-in capital       Preferred stock, cumulative, 8,833 shares authorized, 5,300 shares issued and outstanding

$ 556,500

      Common stock, no par, 744,827 shares authorized, 576,000 shares issued

1,728,000

   Total paid-in capital

2,284,500

   Retained earnings

1,152,000

        Total paid-in capital and retained earnings

3,436,500

   Less: Treasury stock (5,000 common shares)

26,667

Total stockholders’ equity

$3,409,833

Explanation / Answer

a Common stock outstanding = 576000-5000 = 571000 b The stated value of the common stock =1728000/576000=3 c The par value of the preferred stock =556500/5300=105 d The dividend rate =44520/556500= 8% e The Retained Earnings balance =1152000-75600= 1076400

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