Response to the following problem:
Record the declaration of the 20X3 dividends on December 28, 20X3, and the payment of the dividends on January 17, 20X4. Use separate Dividends Payable accounts for Preferred and Common.
Stockholders' Equity
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Nonvoting preferred stock, no-par.................................
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$320,000
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Common stock, $1.50 par value, authorized
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|
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75,000 shares: issued 30,000 shares...........................
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54,000
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Additional paid-in capital-common.............................
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231,000
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Retained earnings ........................................................
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141,000
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Total stockholders' investment .....................................
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$746,000
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Notes to the financial statements indicate that 8,000 shares of $3.00 preferred stock with a stated value of $40 per share are issued and outstanding. Preferred dividends are in arrears for three years, including the current year. On the balance sheet date, the market value of the Lopez common stock is $10 per share.
Required:
1. Is the preferred stock cumulative or noncumulative? How can you tell?
2. What is the amount of the annual preferred dividend?
3. Which class of stockholders controls the company? Give your reason.
4. What is the total paid-in capital of the company?
5. What was the total market value of the common stock?
6. Compute the book value per share of the common stock.