ACC 206 Week 2 Problem 1 Analysis of stockholders’ equity (Updated October 2013).

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Analysis of stockholders’ equity

Star Corporation issued both common and preferred stock during 20X8. The stockholders’ equity sections of the company’s balance sheets at the end of 20X8 and 20X7 follow.

                                                                                                                   20X8                                      20X7

Preferred stock, $100 par value, 10%                                               $600,000                         $500,000

Common stock, $10 par value                                                              2,350,000                     1,550,000

 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                                                              $16,064,000                   $12,570,000

 a. Compute the number of preferred shares that were issued during 20X8.

 b. Calculate the average issue price of the common stock sold in 20X8.

c. By what amount did the company’s paid-in capital increase during 20X8?

d. Did Star’s total legal capital increase or decrease during 20X8? By what amount?