The stockholders' meeting for Mantle Corporation has been in progress for some time. The chief financial officer for Mantle is presently reviewing the company's financial statements and is explaining the items that make up the stockholders' equity section of the balance sheet for the current year. The stockholders' equity section for Mantle Corporation at December 31, 1998, is presented here:

A number of questions regarding the stockholders' equity section of Mantle Corporation's balance sheet have been raised at the meeting.
\section*{Instructions}
Answer the following questions as if you were the chief financial officer for Mantle Corporation:

(a) "What does the cumulative provision related to the preferred stock mean?"

(b) "I thought the common stock was presently selling at \(\$ 29.75\), and yet the company has the stock stated at \(\$ 1\) per share. How can that be?"

(c) "Why is the company buying back its common stock? Furthermore, the treasury stock has a debit balance because it is subtracted from stockholders' equity. Why is treasury stock not reported as an asset if it has a debit balance?"

(d) "Why is it necessary to show additional paid-in capital? Why not just show common stock at the total amount paid in?"

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Stockholders' equity Paid-in capital Capital stock MANTLE CORPORATION Partial Balance Sheet Preferred stock, authorized 1,000,000 shares cumulative, $100 par value, $8 per share, 6,000 shares issued and outstanding Common stock, authorized 5,000,000 shares, $1 par value, 3,000,000 shares issued and 2,700,000 outstanding Total capital stock Additional paid-in capital In excess of par value-preferred stock In excess of par value-common stock Total additional paid-in capital Total paid-in capital Retained earnings Total paid-in capital and retained earnings Less: Common treasury stock (300,000 shares) Total stockholders' equity $ 600,000 3,000,000 3,600,000 $ 50,000 25,000,000 25,050,000 28,650,000 900,000 29,550,000 9,300,000 $20,250,000