Question

The stockholders’ equity section of Indigo Corporation’s balance sheet at December 31 is presented here.INDIGO CORPORATIONBalance Sheet (partial)Stockholders’ equity Paid-in capital Preferred stock, cumulative, 11,833 shares authorized, 7,100 shares issued and outstanding $ 710,000 Common stock, no par, 717,672 shares authorized, 555,000 shares issued 1,665,000 Total paid-in capital 2,375,000 Retained earnings 1,151,000 Total paid-in capital and retained earnings 3,526,000 Less: Treasury stock (7,000 common shares) 37,333Total stockholders’ equity $3,488,667From a review of the stockholders’ equity section, answer the following questions.(a) How many shares of common stock are outstanding?Common stock outstanding shares(b) Assuming there is a stated value, what is the stated value of the common stock?The stated value of the common stock $per share(c) What is the par value of the preferred stock?The par value of the preferred stock $per share(d) If the annual dividend on preferred stock is $49,700, what is the dividend rate on preferred stock?The dividend rate %(e) If dividends of $71,400 were in arrears on preferred stock, what would be the balance reported for retained earnings?The Retained Earnings balance $

Answer 1

a) shares outstanding: 548,000

b) $3 per share

c) $10 per share

d) 7% return

e) zero as if there were retained earnings they should be used to pay the dividends in arrears to preferred stock

Step-by-step explanation:

issued shares: 555,000

treasury stock: (7,000)

outstanding 548,000

b)

common stock balance: $ 1,665,000

shares issued: 555,000

face value per share: $3

c) 710,000 preferred stock blaance / 7,100 shares = 100

d)

dividend/face value of preferred stock:

49,700 / 710,000 = 0.07