Your corporation has the following stockholders equity. Common Stock at par $ 750,000 Paid in capital in

Question:

Your has the following stockholders equity.
Common Stock at par $ 750,000
Paid in capital in excess of par 1,250,000
Retained earnings 2,500,000
Total $ 4,500,000

a. What is the maximum amount of dividends the can pay in states where the firm’s legal capital is defined as the of its common stock?
b. How does your answer change if the firm is in a state where legal capital includes all paid-in capital?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...