You are planning to analyze Voltek Company"s December 31, Year 6, balance sheet. The following information is available:
1. Beginning and ending balances are identical for both accounts receivable and inventory.
2. Net income is $1,300.
3. Times interest earned is 5 (income taxes are zero). Company has 5% bonds outstanding and issued at par.
4. Net profit margin is 10%. Gross profit margin is 30%. Inventory turnover is 5.
5. Days" sales in receivables is 72 days.
6. Sales to end-of-year working capital is 4. Current ratio is 1.5.
7. Acid-test ratio is 1.0 (excludes prepaid expenses).
8. Plant and equipment (net) is $6,000. It is one-third depreciated.
9. Dividends paid on 8% nonparticipating preferred stock are $40. There is no change in common shares outstanding during Year 6. Preferred shares were issued two years ago at par.
10. Earnings per common share are $3.75.
11. Common stock has a $5 par value and was issued at par.
12. Retained earnings at January 1, Year 6, are $350.
Required:
a. Given the information available, prepare this company"s balance sheet as of December 31, Year 6 (include the following account classifications: cash, accounts receivable, inventory, prepaid expenses, plant and equipment (net), current liabilities, bonds payable, and stockholders" equity).
b. Determine the amount of dividends paid on common stock in Year 6.