Question

The stockholders’ equity section of Bramble Corp.’s balance sheet at December 31 is presented here.

Answer 1

Answer:

Common stock outstanding is 558,100

Stated value of common stock is $4.00  per share

Par value of preferred stock is $105 per share

Dividend rate on preferred stock is 6%

The arrears of $73,800 would not impact the retained earnings,they are to be declared before the impact is felt in retained earnings.

Explanation:

Common stock outstanding =issued common stock -treasury stock

                                              =565,000-6,900

                                              ==558,100

Stated value of common stock=value of shares issued/shares issued

                                                   =$2,260,000/565,000

                                                    =$4.00  per share

Par value of preferred stock=value of shares issued/shares issued

                                              =$787,500/7500

                                              =$105 per share

preferred dividends=Preferred share capital *Dividend rate on preferred stock

preferred dividends is $47,250

preferred share capital is $787,500

dividend rate on preferred stock is unknown

$47,250=$787,500*Dividend rate on preferred stock

Dividend rate on preferred stock=$47,250/$787,500

                                                       =6%

The arrears of $73,800 would not impact the retained earnings,they are to be declared before the impact is felt in retained earnings.