Question

The stockholders’ equity section of Fauberg Marigny Corporation at December 31 is as follows.

FAUBERG MARIGNY CORPORATION Balance Sheet (partial)
Stockholders' equity
	Paid-in capital
			Preferred stock, cumulative, 10,000 shares authorized,     5,000 shares issued and outstanding					$300,000
			Common stock, no par, 750,000 shares authorized,     300,000 shares issued					1,500,000
					Total paid-in capital			1,800,000
	Retained earnings							2,050,000
	Total paid-in capital and retained earnings							3,850,000
	Less: Treasury stock (5,000 common shares)							(64,000	)
Total stockholders' equity								$3,786,000

From a review of the stockholders’ equity section, answer the following questions.

1)How many shares of common stock are outstanding?

2) Assuming there is a stated value, what is the stated value of the common stock?Stated value of common stock per share. 3)What is the par value of the preferred stock? Par value of preferred stock per share 4) If the annual dividend on preferred stock is $18,000, what is the dividend rate on preferred stock? Dividend rate on preferred stock 5) If dividends of $36,000 were in arrears on preferred stock, what would be the balance in retained earnings? Balance for Retained Earnings

Answer 1

1) Outstanding shares = 300000-5000 = 295000 Shares

2) Stated value = 1500000/300000 = 5 per share

3) Par value of preferred stock = 300000/5000 = 60 per share

4) Dividend rate = 18000/300000 = 6%

5) Balance in retained earnings = 2050000-36000 = 2014000