The stockholders' equity section of a company's year-end balance sheet follows: Preferred stock, $50 par value, 9% cumulative and nonparticipating, 10,000 shares outstanding ………………$500,000 ?Paid-in capital in excess of par value, preferred stock 50,000?Total capital paid-in by preferred stockholders ……………..?$550,000 Common stock, $0.50 par value, 1,500,000 shares outstanding ………………………………………………$750,000 ?Paid-in capital in excess of par value, common stock ………150,000?Total capital paid-in by common stockholders ……………?900,000Total paid-in capital …………………………………………? $1,450,000Retained earnings …………………………………………?1,690,000Total
stockholders' equity …………………………………? $3,140,000The preferred stock has a call price of $51.50 per share plus dividends in arrears. Only one year of dividends is in arrears. Calculate the book value per (1) preferred share, and (2) common share.
What will be an ideal response?
Total stockholders' equity | ? | $3,140,000 |
| Less equity applicable to preferred shares: | ? | ? |
| Call price ($51.50 * 10,000 shares) | $515,000 | ? |
| Cumulative dividends in arrears (9% * $500,000) | 45,000 | (560,000) |
| Equity applicable to common shares | ? | $2,580,000 ? |
(2) Book value per common share: $2,580,000/1,500,000 shares = $1.72 per common share
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The payroll records of Mortimer Inc. revealed that all the employees worked an average of 48 hours in the month of June. Each worker received $7.20 an hour for the first 40 hours per week and $10.80 for the eight hours overtime. In May, some employees had been paid as much as $8.00 per hour for the first 40 hours, but the company reduced the scale when female employees complained that men were being paid more for the same work. The records also revealed that the plant manager and personnel manager worked as many as 60 hours per week but did not receive overtime pay. Discuss any legal problems that may exist in this scenario.
What will be an ideal response?
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