Common and Preferred Stock (Accounting Genius)

Common and Preferred Stock

· Why are paid-in-capital and retained earnings displayed separately in the stockholder's equity section of the balance sheet?

· Why would investors buy common stock when preferred stock is available?

· If you owned 5,000 shares of common stock in Microsoft Corporation and someone offered to buy the stock for its book value, would you accept the offer? Provide rationale for your decision.