Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 89

Comprehensive problem—calculate missing amounts, dividends, total shares, and per share information Allyn, Inc., has the following owners’ equity section in its November 30, 2010, balance sheet:

Paid-in capital:
12% preferred stock, $60 par value, 1,500 shares
authorized, issued, and outstanding	$ ?
Common stock, $8 par value, 100,000 shares
authorized, ? shares issued, ? shares outstanding	240,000
Additional paid-in capital on common stock	540,000
Additional paid-in capital from treasury stock	13,000
Retained earnings	97,000
Less: Treasury stock, at cost (2,000 shares of common)	(18,000)
Total stockholders’ equity	$ ?

Required:

a. Calculate the amount of the total annual dividend requirement on preferred stock.

---

b. Calculate the amount that should be shown on the balance sheet for preferred stock.

---

c. Calculate the number of shares of common stock that are issued and the number of shares of common stock that are outstanding.

---

d. On January 1, 2010, the firm’s balance sheet showed common stock of $210,000 and additional paid-in capital on common stock of $468,750. The only transaction affecting these accounts during 2010 was the sale of some common stock. Calculate the number of shares that were sold and the selling price per share.

---

e. Describe the transaction that resulted in the additional paid-in capital from treasury stock.

---

f. The retained earnings balance on January 1, 2010, was $90,300. Net income for the past 11 months has been $24,000. Preferred stock dividends for all of 2010 have been declared and paid. Calculate the amount of dividends on common stock during the first 11 months of 2010.

Step 1 of 8

Computation of missing amounts, total shares, and per share information:

By extracting the information:

a) The computation of total annual dividend requirement on preferred stock is as follows: