Reference no: EM131679988

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

Answer the following questions in words using the Lachlin Corporation Balance Sheet

• 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?

Please provide an explanation of each answer.

Lachlin Corporation Balance Sheet Partial

Stockholders' Equity

Pain-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