Assignment
Purpose of Assignment
The purpose of this assignment is to help you become familiar with examining the stockholders' equity section of the balance sheet.
Assignment Steps
Resources: Financial Accounting: Tools for Business Decision Making, Ch. 11.
Answer the following questions in 1,050 words using the Lachlin Corporation Balance Sheet located on p. 575 of Financial Accounting:
• How many shares of common stock are outstanding?
• Assuming there is a stated value, what is the stated value of the common stock?
• What is the par value of the preferred stock?
• If the annual dividend on preferred stock is $36,000, what is the dividend rate on preferred stock?
• If dividends of $72,000 were in arrears on preferred stock, what would be the balance reported for retained earnings?
LACHLIN CORPORATION
Balance Sheet (partial)
Stockholders' equity
Paid-in capital
Preferred stock, cumulative, 10,000 shares authorized, 6,000 shares issued and outstanding $ 600,000
Common stock, no par, 750,000 shares authorized, 580,000 shares issued 2,900,000
Total paid-in capital 3,500,000
Retained earnings 1,158,000
Total paid-in capital and retained earnings 4,658,000
Less: Treasury stock (6,000 common shares) 32,000
Total stockholders' equity $4,626,000