Answer The Following Questions In 1050 Words Using Lachl
Answer The Following Questions In 1050 Words Using The Lachlincorpor
Answer the following questions in 1,050 words using the Lachlincorpor
Answer the following questions in 1,050 words using the Lachlincorpor
Answer the following questions in 1,050 words using the Lachlincorpor
Answer the following questions in 1,050 words using the Lachlincorpor
Answer the following questions in 1,050 words using the Lachlincorpor
Answer the following questions in 1,050 words using the Lachlincorpor
Answer the following questions in 1,050 words using the Lachlincorpor
Answer the following questions in 1,050 words using the Lachlincorpor
Answer the following questions in 1,050 words using the Lachlincorpor
Answer the following questions in 1,050 words using the Lachlincorpor
Paper For Above instruction
The financial analysis of Lachlin Corporation provides crucial insights into its equity structure, dividend policies, and retained earnings, based on the balance sheet depicted on page 575 of Financial Accounting. This exploration aims to answer several key questions regarding the company's common and preferred stocks, dividend obligations, and retained earnings balance.
Firstly, determining the number of outstanding shares of common stock involves reviewing the balance sheet's equity section. Typically, this section reports the total common stock at its stated or par value, along with additional paid-in capital. Suppose the balance sheet states that common stock has a total value of $500,000 and a stated value per share of $10; dividing the total common stock by the stated value yields the number of outstanding shares. In this case, $500,000 / $10 = 50,000 shares. If no stated value exists, then the number of shares can be derived from the total common stock and the par or stated value if provided separately.
Secondly, understanding whether the stock has a stated value entails examining the accompanying notes or the balance sheet details. If a stated value is specified, it becomes an important figure in accounting for issuing stock and calculating par or stated capital. If the balance sheet notes a stated value, for example, $10 per share, then that amount represents the stated value of the common stock. The distinction between par and stated value is significant because it affects the journal entries when issuing stock and the recording of additional paid-in capital.
Next, the par value of the preferred stock is explicit on the balance sheet under preferred stock entries. Let’s assume the preferred stock is listed at a par value of $100 per share with a total of 10,000 shares issued, this indicates that the preferred stock's par value is $100 per share. Par value serves as a legal minimum price and a basis for computing dividend rates and other financial metrics.
To determine the dividend rate on preferred stock, given that the annual dividend is $36,000, one can use the total preferred stock par value or total preferred shares issued. If, for example, preferred stock has a par value of $100 and 10,000 shares issued, then total preferred stock’s dollar amount is 10,000 * $100 = $1,000,000. The dividend rate is calculated as the annual dividend divided by the total preferred stock par value. Therefore, $36,000 / $1,000,000 = 3.6%, which indicates the dividend rate is 3.6% annually on the preferred stock’s par value.
Finally, if dividends of $72,000 were in arrears on preferred stock, the reported balance for retained earnings would be affected. Arrears dividends are overdue and unpaid dividends on preferred stock, often accumulated over time if preferred stock is cumulative. To compute the impact, the total amount in arrears—$72,000—must be added back to retained earnings, reflecting the pending dividend obligation that has not been paid but resides within the retained earnings account as an accrued liability or a note. The retained earnings balance would essentially be decreased by $72,000 to reflect the dividends paid in arrears. Alternatively, if dividends in arrears are held as a separate accrued liability, then the retained earnings figure remains unaffected directly, but a note or liability account would record the arrear amount. In conclusion, understanding these elements assists in analyzing the company's financial health and dividend policies comprehensively, as reflected on Lachlin Corporation’s balance sheet.
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