- A corporation has 100,000 shares of 7 percent cumulative preferred stock and 40,000 shares of common stock outstanding. Par value for each is $10. No dividends were paid last year, but this year a $150,000 dividend is paid.
a)How much of this $150,000 goes to the holders of preferred stock?
Number of preferred stock= 100,000
Par Value of the same = 100000*$10=$1000000
Cumulative value= 7% of 1000000=$ 70000
Number of Common stock = 40000
Par Value of Common stock= 40000*$10= $400000
Total Value= 1000000+400000+70000= $1470000
Dividend for preferred shareholders: (1000000/1470000)*150000=$102040.80
- b) except that the preferred stock is non-cumulative. How much of the $150,000 now goes to the holders of common stock?
If it’s not cumulative then, the total value would be =1000000+400000=$ 1400000
Dividend Paid would be: (1000000/1400000)*$150000= $107142.90
2.) If Willis Corporation has 80,000 shares of common stock authorized, has 50,000 shares of common stock issued, and holds 4,000 shares of common stock as treasury stock, the total number of outstanding shares of Willis Corporation amounts to
Total number of outstanding shares: Stock issues- Treasury Stock= 50000-4000=46000
3.) Use the following to answer questions
Shown below is information relating to the stockholders’ equity of Lakeside Corporation as of December 31, 2006:
| 8% cumulative preferred stock, $100 par………………………… | $300,000 | |
| Common stock, $10 par, 500,000 shares authorized, 90,000 shares issued and outstanding………………………………….. |
900,000 |
|
| Additional paid-in capital: common stock……………………….. | 300,000 | |
| Retained earnings (Deficit)…………………………………………… | (20,000 | ) |
| Dividends in arrears……………………………………………………. | 16,000 |
a.) Refer to the above data. What was the original issue price per share of common stock?
Original issue price is the par price which is $10
- ) Refer to the above data. Compute total paid-in capital.
Total Paid in Capital= Par value of common stock+ Par value of Preferred stock+ Additional Paid In capital= 300000+900000+300000= $1500000
c)Refer to the above data. Total stockholders’ equity is:
Total stock holder equity is= = Par value of common stock+ Par value of Preferred stock+ Additional Paid In capital+ Retained earnings+ Dividend in Arrears=300000+900000+300000+(20000)+16000=$1504000
