Stockholders’ Equity Section with Selected “Other Information”

The stockholders’ equity section of Glory Company’s balance sheet was as follows as of December 31, 2009, and December 31, 2008:

Required:
Based on the stockholders’ equity section for Glory Company, answer the following questions:
1. Do you believe Glory Company made a profit during the year 2009? Assuming that only net income and dividends changed the retained earnings balance from 2008 to 2009, by how much did net income exceed dividends?
2. What was the total amount of money raised during 2009 from the selling of stock?
(Assume that only the selling of stock affected the contributed capital accounts.)
3. Did the market value of Glory Company’s securities that affect the equity section increase or decrease in 2009? By how much?
4. Interpretive Question: The board of directors believes it should fire the current management of the company because total stockholders’ equity decreased substantially. Do you agree? Why or why not?

Transcribed Image Text:

Preferred stock Glory Company Stockholders' Equity Sections of Balance Sheet December 31, 2009 and 2008 (in millions) Common stock Paid-in capital, various types Retained earnings Subtotal... Accumulated foreign currency translation adjustments Net unrealized gains (losses) on investments in certain debt and equity securities Total stockholders' equity 2009 2008 $ 21.4 $ 21.4 48.4 43.2 22.6 15.3 51.8 41.2 $144.2 $121.1 21.4 57.3 (46.4) (8.8) $119.2 $169.6