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Stockholders Equity transactions

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The stockholders' equity section of Linton Corporation at December 31 is as follows.

LINTON CORPORATION
Balance Sheet (partial)
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

(a) How many shares of common stock are outstanding?
(b) Assuming there is a stated value, what is the stated value of the common stock?
(c) What is the par value of the preferred stock?
(d) If the annual dividend on preferred stock is $18,000, what is the dividend rate on preferred stock?
(e) If dividends of $36,000 were in arrears on preferred stock, what would be the balance in Retained Earnings?

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(a) How many shares of common stock are outstanding?

Outstanding shares = Shares issued - treasury stock
= 300,000 - 5,000 = 295,000 shares

(b) Assuming there is a stated value, what is the stated value of the common stock?

Stated value ...

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The solution explains some questions relating to stockholders equity transactions

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The answer to Stockholders equity transactions

Sands Corporation has the following capital structure at the beginning of the year:

6% preferred stock, $50 par value, $300,000
20,000 shares authorized, 6,000 shares issues and outstanding

Common stock $10 par value 60,000 shares authorized $400,000
40,000 shares issued and outstanding

Paid in capital in excess of par $110,000
---------------
Total paid in capital 810,000

Retained earnings 440,000
-------------
Total Stockholder equity 1,250,000

Instructions

a) Record the following transactions which occurred consecutively (show all calculations)

1) A total cash dividend of 90,000 was declared and payable to stockholders of record. Record dividends payable on common and preferred stock in separate accounts

2) A 10% common stock dividend was declared. The average market value of the common stock is $18 a share

3) Assume that net income for the year was $150,000 (record the closing entry) and the board of directories appropriated $70,000 of retained earnings to plant expansion

b) Construct the stockholders equity section incorporating all the above information

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