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Stockholders’ Equity Section of the Balance Sheet (Example)

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Stockholders’ Equity Section Student’s Name Institution’s Name Outstanding Shares A company outstanding share refers to the stock that is currently held by all the shareholders. This includes share blocks that institutional investors have and restricted shares that officers of the company and insiders own. In a balance sheet of any company outstanding shares are usually indicated under the Capital Stock. Outstanding shares of a company is not always fixed it may vary widely with times due to various reasons such as a share issue by a company. All authorized shares that shareholders of a company hold excluding the company treasury stock is referred to as outstanding shares. Thus as Kimmel (2009) explains the number of outstanding shares is the total stock in the open market including institutional investors’ shares and restricted shares owned to preferred shareholders before paying any dividend to common shareholders. Preferred dividends usually accumulate and should be reported in the financial statement of the company. Cumulative preferred dividends are often recognized as a liability. They are recorder in the dividend payable account in the section of current liability on a company’s balance sheet. When a dividend is declared the preferred dividend in arrears must be paid first from the retained earnings. In this case the preferred dividend in arrears is $72 000. Thus if a dividend was declared the balance on the retained earnings would be less $72 000. That is $1 086 000. References Kimmel P. D. Weygandt J. J. Kieso D. E. & Fewox C. M. (2009). Financial accounting: Tools for business decision making. Study guide. Hoboken N.J: John wiley & Sons. [...]

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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 Resources: Financial Accounting: Tools for Business Decision Making, Ch. 11 Answer the following questions in 1,050 words using the Lachlin Corporation Balance Sheet located on p. 575 of Financial Accounting: 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? Use the Week 4 Excel® spreadsheet and submit with your answers.

Subject Area: Accounting

Document Type: Paraphrasing

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