Question

Walker Inc. has the following capital structure

Preferred Stock: $25 par value, 10,000 shares authorized........................................ $180,000

Common Stock: $10 Par value, 100,000 shares authorized........................................$900,000

Total Paid in capital...................................................................................$1,080,000

Retained Earnings.........................................................................................$550,000

Total Stock holders' equity.......................................................................... $1,630,000

The number of issued and outstanding shares of both preferred and common stock have been the

same for last two years. Dividends on preferred stock are 8 percent of par value and have been paid

each year the stock was outstanding except for the immediate past year. In the current year the

Management declares a dividend of $60,000.

a. How many shares of preferred stock and common stock have been issued?

b. Indicate the amount of dividends that will be paid to both common and preferred

stockholders assuming

i. Preferred stock is cumulative

Ii.Preferred stock is non-cumulative

c. What was the average issuance price per share of common stock?

d. What is the amount of legal capital and paid-in capital?