The stockholders equity section of Creighton Companys balance sheet is shown as follows: Required a. Assuming the

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The stockholders’ equity section of Creighton Company’s balance sheet is shown as follows:

CREIGHTON COMPANY As of December 31, Year 3 Stockholders' equity Preferred stock, $10 stated value, 7% cumulative, 300 s


Required
a. Assuming the preferred stock was originally issued for cash, determine the amount of cash collected when the stock was issued.
b. Based on the class B common stock alone, determine the amount of the company’s legal capital.
c. Based on the class B common stock alone, determine the minimum amount of assets that must be retained in the company as protection for creditors.
d. Determine the number of shares of class B common stock that are available to sell as of December 31, Year 3.
e. Assuming Creighton purchases treasury stock consisting of 25 shares of its no par common stock on January 1, Year 4, determine the amount of the no-par common stock that would be outstanding immediately after the purchase.
f. Based on the stockholders’ equity section shown earlier, can you determine the market value of the preferred stock? If yes, what is the market value of one share of this stock?


Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Introductory Financial Accounting for Business

ISBN: 978-1260299441

1st edition

Authors: Thomas Edmonds, Christopher Edmonds

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