Stockholders’ Equity: The Elements of Corporate Ownership Quick Company reported the following stockholders’ equity balances at December 31:

a. If Quick Company wishes to issue an additional 20,000 shares of common stock, which shareholders have the right to purchase a proportionate share of the new shares issued? Why is this right important?

b. Which shareholders have a priority claim on dividend payments and on assets distributed if the company is liquidated? Why is priority given to some shareholders and not to others?

c. What is the source of additional paid-in capital? Is addi- tional paid-in capital or retained earnings a better indicator of past operating success? Explain.

d. Why might Quick Company report lower net income per year than Slow Company and yet report a larger balance in retained earnings?

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Preferred stock ($15 par; 12,000 shares issued and outstanding) Common stock ($4 par; 400,000 shares authorized; 105,000 shares issued and outstanding) Additional paid-in capital Retained earnings Total stockholders' equity $ 180,000 420,000 310,000 640,000 $1,550,000