The stockholders’ equity section of Glory Company’s ba
Question and Solution
The stockholders’ equity section of Glory Company’s balance sheet was as follows as of December 31, 2012, and December 31, 2011:
Required: Based on the stockholders’ equity section for Glory, answer the following questions: 1. Do you believe Glory made a profit during the year 2012? Assuming that only net income and dividends changed the Retained Earnings balance from 2011 to 2012, by how much did net income exceed dividends? 2. What was the total amount of money raised during 2012 from the selling of stock? (Assume that only the selling of stock affected the contributed capital accounts.) 3. Did the market value of Glory’s securities that affect the equity section increase or decrease in 2012? By how much? 4. Interpretive Question: The board of directors believes it should fire the current management of the company because total stockholders’ equity decreased substantially. Do you agree? Why or whynot?