Interpreting Shareholders' Equity Section Answer the Following Questions Based on the Shareholders' Equity Section

question 27

Essay

Interpreting shareholders' equity section.
The shareholders' equity section of the balance sheet of Powell Corporation (with certain details omitted) appears below:
$\begin{array}{llr} \text { Shareholders'Equity } &\\ \text {8\% ron-cumulative preferenoe share, \$100 par; 100,000 shares authorized, ?shares issued } &\$1,900,000\\ \text { Orlinary share, \$5 par, 200,000 shares authorized, ??shares issued} &950,000\\ \text { Share preminim} &\\ \text {Preference share } &106,000\\ \text { Ordinary share } &1,970,000\\\\ \text {Issued and fully paid capital: } &\$4,926,000\\ \text {Retained eaming:) } &1,170,000\\\\ \text { Total shareholders' equity} &\$6,096,000\\\end{array}$
Answer the following questions based on the shareholders' equity section given above:
(a) What is the total amount of legal capital?
(b) What is the total amount of dividends paid annually to the preference shareholders?
(c) What is the average issue price of a share of ordinary share?
(d) The balance in retained earnings at the beginning of the current year was $1,351,500, and there were no dividends in arrears. Profit for the current year was $700,000. What is the amount of the dividends declared on each share of ordinary share during the current year?
(a) $2,850,000
(b) $152,000
(c) $15.37 per share
(d) $3.84 per share
Computations

Identify and differentiate between perfectly elastic, perfectly inelastic, and variably elastic demand curves.

Recognize the effects of market dynamics, such as taxes, on goods with different elasticities.

Apply the concept of elasticity to real-world economic scenarios involving changes in price and quantity demanded.

Understand the basic principles of the law of demand.

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Definitions:

Economic Crisis

A situation where an economy experiences a sudden downturn brought on by a financial crisis, leading to a significant decline in activity across the market.

Accepts Credit Cards

This term indicates a business's or entity's capability to process transactions using credit cards as a form of payment.

Form of Factoring

A financial transaction where a business sells its accounts receivable to a third party at a discount to improve cash flow.

Securitizations

The process of pooling various types of contractual debt such as mortgages or loans and selling their related cash flows to third party investors as securities.