Analysis of stockholders’ equity
Star Corporation issued both common and preferred stock during 19X6. The stockholders’ equity sections of the company’s balance sheets at the end of 19X6 and 19X5 follow.
|
19X6 |
19X5 |
|
|
Preferred stock, $100 par value, 10% |
$580,000 |
$500,000 |
|
Common stock, $10 par value |
2,350,000 |
1,750,000 |
|
Paid-in capital in excess of par value |
||
|
Preferred |
24,000 |
— |
|
Common |
4,620,000 |
3,600,000 |
|
Retained earnings |
8,470,000 |
6,920,000 |
|
Total stockholders’ equity |
$16,044,000 |
$12,770,000 |
1. Compute the number of preferred shares that were issued during 19X6.
2. Calculate the average issue price of the common stock sold in 19X6.
3. By what amount did the company’s paid-in capital increase during 19X6?
4. Did Star’s total legal capital increase or decrease during 19X6? By what amount?