A corporation reports the following year-end stockholders' equity: Paid-in capital:? Preferred stock, 8%, 100,000 shares authorized, 50,000 shares issued …………………. $ 2,500,000 Paid-in capital in excess of par, Preferred…………..125,000 Common stock, $1 par, 5,000,000 shares authorized, 4,000,000 shares issued ………………..4,000,000 Paid-in capital in excess of par, Common …………..1,200,000 Total paid-in capital ………………………………..$ 7,825,000Retained earnings ……………………………………..10,675,000Total stockholders' equity …………………………….$18,500,000Determine the following:(1) Par value for the preferred stock.(2) Book value per share for both preferred stock and common
stock assuming no dividends in arrears.
What will be an ideal response?
(1) Preferred stock par value = $2,500,000/50,000 shares = $50
(2) Book values per share:
| Total stockholders' equity ……………………… | $18,500,000 |
| Less preferred stockholders' equity ? | 2,500,000 |
| Common stockholders' equity ………………….. | $16,000,000 |
| ? | ? |
| Book value per share of preferred stock ($2,500,000/50,000 shares) ………………. | $50 |
| Book value per share of common stock ($16,000,000/4,000,000 shares)…………….. ? | $4 |
| ? | ? |
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