Assignment Description

Please read the scenario below, and then answer the questions that follow in a 3-page analysis. The questions will guide your analysis of the situation, but they will need to be presented as part of a report to the owner of the company.

Scenario:

The stockholders equity section of the balance sheet contains accounts such as the following:

• Common stock
• Preferred stock
• Additional paid in capital
• Other accumulated comprehensive income
• Retained earnings

It is important to understand how changes in the accounts impact the balance sheet and the financial position of the organization.

Ginseng Inc. has $200,000 of 5%, $10 par value preferred stock and $450,000 of $5 par value common stock issued and outstanding on December 31, 2021.

There were no stock issuances, stock splits, or stock dividends for 2021. The organization's calendar year end is on December 31, 2021.

Preferred stock did not receive any dividends for 2019 or 2020 because the company did not have adequate cash reserves to pay out dividends.

Preferred stock has a mix of characteristics. The percentages are detailed as follows:

• 10% of the preferred stock is noncumulative, nonparticipating.
• 20% of the preferred stock is cumulative, nonparticipating.
• 20% of the preferred stock is noncumulative, participating.
• 50% of the preferred stock is cumulative, participating.

The current years net income is $795,000, and the company declared and paid dividends of $50,000 during the calendar year.

The beginning retained earnings balance at January 1, 2021 was $600,000. The company also had $80,000 in Treasury stock at December 31, 2021.

Based on the information presented in the scenario about the stockholder equity accounts of Ginseng Inc., answer the following questions.

1. How many shares of preferred stock are outstanding on December 31, 2021?
2. How many shares of common stock are outstanding on December 31, 2021?
3. How many shares of the outstanding preferred stock are cumulative and participating at December 31, 2020?
4. How many shares of the outstanding preferred stock are noncumulative and participating at December 31, 2020?
5. How many shares of the outstanding preferred stock are cumulative and nonparticipating at December 31, 2020?
6. How many shares of the outstanding preferred stock are noncumulative and nonparticipating at December 31, 2020?
7. What amount of dividends in arrears was paid in 2021?
8. What is the ending retained earnings balance for the organization at December 31, 2021?
9. What type of account is Treasury stock?
10. What is the normal balance for retained earnings?
11. What is the normal balance for dividends?
12. How do cash dividends that have been declared but not paid impact retained earnings?

Submitting your assignment in APA format means, at a minimum, you will need the following:

• Title page: Remember the running head. The title should be in all capitals.
• Length: 3 pages minimum
• Body: This begins on the page following the title page and abstract page and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The typeface should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics, except as required for APA-level headings and references. The deliverable length of the body of your paper for this assignment is 3 pages. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged.
• Reference page: References that align with your in-body academic sources are listed on the final page of your paper. The references must be in APA format using appropriate spacing, hanging indent, italics, and uppercase and lowercase usage as appropriate for the type of resource used. Remember, the Reference page is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.