Problem

Analytical case (part 1)—calculate missing owners’ equity amounts for Case 8.29 2008 (Note...

Analytical case (part 1)—calculate missing owners’ equity amounts for Case 8.29 2008 (Note: The information presented in this case is also used for Case 8.30. For now you can ignore the 2011 column in the balance sheet; all disclosures presented here relate to the June 30, 2010, balance sheet.) DeZurik Corp. had the following owners’ equity section in its June 30, 2010, balance sheet (in thousands, except share and per share amounts):

	June 30 (in thousands)
	2011	2010
Paid-in capital:
$4.50 Preferred stock, $ ? par value, cumulative, 200,000 shares authorized, 96,000 shares issued and outstanding		$ 5,760
Common stock, $5 par value, 4,000,000 shares authorized,
3,280,000 shares issued, 3,000,000 shares outstanding
Additional paid-in capital on common stock		22,960
Retained earnings
Less: Treasury common stock, at cost, ? shares
Total owners’ equity	$66,168	$60,000

Required:

a. Calculate the par value per share of preferred stock and determine the preferred stock dividend percentage.

b. Calculate the amount that should be shown on the balance sheet for common stock at June 30, 2010.

c. What was the average issue price of common stock shown on the June 30, 2010, balance sheet?

d. How many shares of treasury stock does DeZurik Corp. own at June 30, 2010?

e. Assume that the treasury shares were purchased for $18 per share. Calculate the amount that should be shown on the balance sheet for treasury stock at June 30, 2010.

f. Calculate the retained earnings balance at June 30, 2010, after you have completed parts a-e. (Hint: Keep in mind that Treasury Stock is a contra account.)

g. (Optional) Review the solutions to parts a-f of this case on the Web site for this book at www.mhhe.com/marshall9e. Assume that the Retained Earnings balance on July 1, 2009, was $19,200 (in thousands) and that net income for the year ended June 30, 2010, was $1,152 (in thousands). The 2010 preferred dividends were paid in full, and no other dividend transactions were recorded during the year. Verify that the amount shown in the solution to part f is correct. (Hint: Prepare a statement of retained earnings or do a T-account analysis to determine the June 30, 2010, balance.)