Question

1. How many shares of preferred stock have been issued?

The stockholders' equity section of Velcro World is presented here. VELCRO WORLD Balance Sheet (partial) ($ and shares in thousands) Stockholders' equity: Preferred stock, $1 par value Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings Treasury stock, 10,000 common shares Total stockholders' equity $ 4,500 15,000 363,000 382,500 273,000 (170,000) $ 485,500 Based on the stockholders' equity section of Velcro World, answer the following questions. Remember that all amounts are presented in thousands. Required: 1. How many shares of preferred stock have been issued? (Enter you answer in total number of shares, not in thousands.)

2. How many shares of common stock have been issued?

3. If the common shares were issued at $15 per share, at what average price per share were the preferred shares issued?

4. If retained earnings at the beginning of the period was $235 million and $15 million was paid in dividends during the year, what was the net income for the year?

Answer 1

C Number of vreferred shares issued $ USOO $ 1 u 500 Shares E 340. u soo Shares Number of common shares iesued 00, 15000 Shares. 5 3 2 Additional paud in capital - $ 363000 (it includes both preferred and common) Issue price of common share =$15 =). Addition paid in capital of common shares is 15000 x (15-1) =216000 i Additional paid in capital of preferred Shares | fs : 36360o - 4 20000 = S200ò. Average issue price for preferred stock > 153000+4500 4500 = $35/Share. 9 Beginning Retained earnings = $235 (millions) (+) Current year profit (Balancing $53 Answer - Dividends (815) - figure) Ending Retained earnings 273