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The stockholders’ equity section of Leyland Corporation’s balance sheet at December 31 is presented here.

LEYLAND CORPORATIONBalance Sheet (partial)\begin{array}{c} \textbf{LEYLAND CORPORATION}\\ \textbf{Balance Sheet (partial)}\\ \end{array}

Stockholders’ equityPaid-in capitalPreferred stock, cumulative, 10,000 shares authorized,6,000 shares issued and outstanding$600,000Common stock, no par, 750,000 shares authorized,580,000 shares issued2,900,000Total paid-in capital3,500,000Retained earnings1,158,000Total paid-in capital and retained earnings4,658,000Less: Treasury stock (6,000 common shares)32,000Total stockholders’ equity$4,626,000\begin{array}{lrr} \text{Stockholders’ equity}\\ \qquad\text{Paid-in capital}\\ \qquad\qquad\text{Preferred stock, cumulative, 10,000 shares authorized,}\\ \qquad\qquad\qquad\text{6,000 shares issued and outstanding}&\text{\$\hspace{7pt}600,000}\\ \qquad\qquad\text{Common stock, no par, 750,000 shares authorized,}\\ \qquad\qquad\qquad\text{580,000 shares issued}&\underline{\text{\hspace{6pt}2,900,000}}\\ \qquad\qquad\qquad\text{Total paid-in capital}&\text{\hspace{1pt}3,500,000}\\ \qquad\text{Retained earnings}&\underline{\text{\hspace{6pt}1,158,000}}\\ \qquad\text{Total paid-in capital and retained earnings}&\text{\hspace{1pt}4,658,000}\\ \qquad\text{Less: Treasury stock (6,000 common shares)}&\underline{\text{\hspace{19pt}32,000}}\\ \text{Total stockholders’ equity}&\underline{\underline{\text{\$\hspace{1pt}4,626,000}}}\\ \end{array}


From a review of the stockholders’ equity section, answer the following questions.

(c) What is the par value of the preferred stock?


Dividend constraints The Howe Company's stockholders' equity account follows:

 Common stock (400,000 shares at $4 par) $1,600,000 Paid-in capital in excess of par 1,000,000 Retained earnings 1,900,000 Total stockholders’ equity $4,500,000\begin{array}{lr}\text { Common stock (400,000 shares at } \$ 4 \text { par) } & \$ 1,600,000 \\ \text { Paid-in capital in excess of par } & 1,000,000 \\ \text { Retained earnings } & \dfrac{1,900,000}\\ \\ \text { Total stockholders' equity } &{\$ 4,500,000} \\ \end{array}

The earnings available for common stockholders from this period's operations are $100,000, which have been included as part of the$1.9 million retained earnings.

b. If the firm has $160,000 in cash, what is the largest per-share dividend it can pay without borrowing?


Answered 10 months ago
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In this part of the exercise, we are required to the maximum dividend-per-share value that The Howe Company can issue if we know the amount of cash, the fact that there will be no borrowing, and the type of legal capital predefined.

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