Gemini Company has the following accounts in the Stockholders' Equity category of the balance sheet:
Common Stock, $10 no par, 10,000 shares authorized, 9,000 issued, 8,000 outstanding
Preferred Stock, $100 par, 8%, cumulative, participating, 1,000 shares authorized, issued, and outstanding Required:
1. Explain how the issuance of stock affects the financial statements when the stock has no par value.
2. Why would preferred stockholders want to have a cumulative feature in preferred stock?
3. When a participating feature is present in preferred stock, how does it affect the amount of dividends that preferred stockholders can expect to receive?

Question

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The Answer of Gemini Company has the following accounts in the Stockholders' Equity category of the balance sheet:
Common Stock, $10 no par, 10,000 shares authorized, 9,000 issued, 8,000 outstanding
Preferred Stock, $100 par, 8%, cumulative, participating, 1,000 shares authorized, issued, and outstanding Required:
1. Explain how the issuance of stock affects the financial statements when the stock has no par value.
2. Why would preferred stockholders want to have a cumulative feature in preferred stock?
3. When a participating feature is present in preferred stock, how does it affect the amount of dividends that preferred stockholders can expect to receive?

Gemini Company Has the Following Accounts in the Stockholders' Equity