Reference no: EM1312954

Calculation of preferred stock, common stock and selling price.

Interpreting The Stockholder's Equity Section of the Balance Sheet

Hampton Inc. began operations on January 1, 2007.  On December 31, 2008, it reported the following stockholders equity section of its balance sheet.

December 31	2008	2007
Stockholders' equity
7% cumulative preferred stock, $100 par value	$300,000	$300,000
Common stock, $2 par value	150,000	120,000
Paid-in capital in excess of par value	830,000	620,000
Retained earnings	362,000	157,500
Treasury stock	(16,800)	(25,725)
Total stockholders' equity	$1,625,700	$1,171,775

The company has a policy of paying out 10% of its net income as cash dividends.  The date of declaration is always 30 days after the end of the year, and the date of payment occurs 60 days after the end of the year.  At year-end 2007, the average price of treasury stock was $10.50.  At year-end 2008, the average price of treasury stock was $12.

Required.

A. How many preferred shares have been issued as of year-end 2007 and 2008?

B. How many common shares have been issued as of year-end 2007?  As of year-end 2008?

C. How many treasury shares are there at year-end 2007?  At year-end 2008?

D. How many common shares are outstanding at year-end 2007?  At year-end 2008?

E. What was the average price (at original issuance) of common stock as of year-end 2007?

F. What was the average selling price of the shares during 2008?

G. What was net income for 2007?  For 2008?

H. What was the dividend per share paid to preferred stock on March 1, 2008?

I. What was the dividend per share paid to common stock on March 1, 2008?

J. What is the dividend per share that is scheduled to be paid to common stock on March 1, 2009?  Why?