# Question: Rickhaus Company is authorized to issue 10 million shares of

Rickhaus Company is authorized to issue 10 million shares of \$ 1 par value common stock and 800,000 shares of \$ 10 par value 7 percent cumulative, convertible, preferred stock. For simplicity assume these are the only relevant events that occurred during the years noted.
1. If Rickhaus issues 1,000,000 shares of common stock for \$ 15 per share and 200,000 shares of preferred stock for \$ 30 per share on January 1, 2006, what would be the amount of legal capital shown on the pro forma balance sheet?
2. If on December 15, 2006, the board of directors declares a cash dividend of \$ 500,000 to share-holders of record on December 23, payable on December 31, what is the amount of the dividend that would be received per share for common shareholders?
3. Assume that Rickhaus distributes a 10 percent common stock dividend on September 1, 2007. How many shares of common stock would be authorized, issued, and outstanding after the dividend?
4. Assume that Rickhaus buys back 50,000 shares of common stock for \$ 50 per share on October 1, 2008. How many shares of common stock would be authorized, issued, and outstanding after the treasury stock is purchased?
5. Assume that all the preferred stock is converted at the rate of 1 to 20 for common stock on March 1, 2009. How many shares of common stock are authorized, issued, and outstanding after the conversion?

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