Exercise 11-11

The stockholders' equity section of Haley Corporation at December 31 is as follows.

HALEY CORPORATION

Balance Sheet(Partial)

Paid-in capitalPreferred stock, cumulative, 10,000 shares authorized, 5,000 shares issued and outstanding $250,000

Common stock, no par, 790,000 shares authorized, 580,000 shares issued 1,160,000

Total paid-in capital 1,410,000

Retained earnings 1,858,000

Total paid-in capital and retained earnings 3,268,000

Less: Treasury stock (8,000 common shares) 46,400

Total stockholders' equity $3,221,600

From a review of the stockholders' equity section, as chief accountant, write a memo to the president of the company answering 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 $20,000, what is the dividend rate on preferred stock?

(e)If dividends of $40,000 were in arrears on preferred stock, what would be the balance in Retained Earnings?