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On 2008 January 2, the King Company received its c

On 2008 January 2, the King Company received its charter. It issued all of its authorized 3,000 shares of no-par preferred stock at USD 104 and all of its 12,000 authorized shares of no-par common stock at USD 40 per share. The preferred stock has a stated value of USD 50 per share, is entitled to a basic cumulative dividend of USD 6 per share, is callable at USD 106 beginning in 2010, and is entitled to USD 100 per share plus cumulative dividends in the event of liquidation. The common stock has a stated value of USD 10 per share. On 2009 December 31, the end of the second year of operations, retained earnings were USD 90,000. No dividends have been declared or paid on either class of stock. a. Prepare the stockholders’ equity section of King Company’s 2009 December 31, balance sheet. b. Compute the book value of each class of stock. c. If USD 42,000 of dividends were declared as of 2009 December 31, compute the amount paid to each class of stock.

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