Reference no: EM132530441

Question - The stockholders' equity section of Erik Corporation at December 31 is as follows. ERIK CORPORATION Balance Sheet (partial) Paid-in capital Preferred stock, cumulative, 10,000 shares authorized, 6,000 shares issued and outstanding $ 300,000 Common stock, no par, 750,000 shares authorized, 600,000 shares issued 1,200,000 Total paid-in capital 1,500,000 Retained earnings 1,858,000 Total paid-in capital and retained earnings 3,358,000 Less: Treasury stock (10,000 common shares) (64,000) Total stockholders' equity $3,294,000 Instructions: From a review of the stockholders' equity section, as chief accountant, write memo to the president of the company answering the following questions.

(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 $30,000, what is the dividend rate on preferred stock?

(e) If dividends of $60,000 were in arrears on preferred stock, what would be the balance in Retained Earnings?