The stockholders’ equity section of Sundberg Corporation’s balance sheet at December 31 is presented here.
SUNDBERG CORPORATION
Balance Sheet (partial)
Stockholders’ equity
Paid-in capital
Preferred stock, cumulative, 10,000 shares authorized,
6,000 shares issued and outstanding ..........$ 600,000
Common stock, no par, 750,000 shares authorized,
600,000 shares issued ...............2,100,000
Total paid-in capital ..................2,700,000
Retained earnings ..................1,158,000
Total paid-in capital and retained earnings .........3,858,000
Less: Treasury stock (8,000 common shares) .........(32,000)
Total stockholders’ equity ...............$3,826,000
Instructions
From a review of the stockholders’ equity section, answer 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 $36,000, what is the dividend rate on preferred stock?
(e) If dividends of $72,000 were in arrears on preferred stock, what would be the balance reported for retained earnings?