Question

Analysis of Stockholders' Equity The Stockholders' Equity section of the December 31, 2017, balance sheet of Eldon Company appeared as follows: Preferred stock, $40 par value, 5,000 shares authorized, ? shares issued $200,000 Common stock, ? par, 10,000 shares authorized, 10,000 shares issued 100,000 Additional paid-in capital—Preferred 9,000 Additional paid-in capital—Common 800,000 Additional paid-in capital—Treasury stock 2,000 Total contributed capital $1,111,000 Retained earnings 39,000 Treasury stock, preferred, 100 shares (3,300) Total stockholders’ equity $ ? Required: Determine the following items based on Eldon's balance sheet. Round all calculations except per-share amounts to the nearest whole number; round per-share amounts to the nearest cent. 1. The number of shares of preferred stock issued 5,000 shares 2. The number of shares of preferred stock outstanding 4,900 shares 3. The average per-share sales price of the preferred stock when issued $ 41.8 per share 4. The par value of the common stock $ 10 per share 5. The average per-share sales price of the common stock when issued $ 90 per share 6. The cost of the treasury stock per share $ 33 per share 7. The total stockholders' equity $ 1,146,700 8. The per-share book value of the common stock assuming that there are no dividends in arrears and that the preferred stock can be redeemed at its par value $ 94.67 per share

Answer 1

The Question has been answered asfollows:

1)

Preferred Stock Issue (NOS)

Preferred shares issued= (Value of shares issued)/(Par value per share)

Preferred stock issued= $200000/$40

Preferred Stock issued= 5000 shares

2)The number of shares of preferred stock outstanding               

Outsatnding shares= issued preferred stock- preferred treasury stock

Outstanding shares= 5000- 100=4900 shares

Outdtanding shares= 4900 shares

3) The average per-share sales price of the preferred stock when issued

=( Preferred issue value +additional paid in capital for prefereed )/ issued preferred shares

= ($200000+9000)/5000

= $ 41.80

4) The par value of the common stock

Common stock par value= (Value of issued common shares)/(Number of issued shares)

= $100000/10000

= $ 10

5) Average per share sales price of the common stock issued

= (Value of issued common shares+ additional common paid in capital)/ (Number of issued shares)

= (100000+800000)/10000

= $ 90

6) Cost of treasury stock per share

= (Total treasury stock value + additional paid in capital of treasury)/ treasury shares

= (3300+2000)/100

= 5300/100

= $ 53

(additional treasury capital has to be included then only we will get the full treasury value)

7) Total stockholders equity

=

Toatl of all components in equity section of balance sheet, less treasury stock

Total contributed capital + Retained earnings- Treasury stock

= $1111000+39000-3300

= $ 1146700

8)As common book value has to be calculated subtract preferred stock value &, then divide by outstanding common shares

= (Total stockholder quantity)-(outstanding shares * preferred par value)

=( $ 1146700)-(4900* 40)

=1146700-196000

=950700

Per share book value= (Total common stock book value )/(outstanding common shares)

= 950700/10000

= $95.07

(NOW AS YOU HAVE GIVEN THE VALUE $94.67 IT IS BECAUSE PREFERRED STOCK OUTSTANDING $5000 =5000*40=20000IS TAKEN DUE TO WHICH 1146700-200000=946700/10000=$94.67But according to my calculation in 5000 shares 100 is element of preferred treasury so value taken is 4900 this difference I have clarified you may ask any doubt)

If my answer is helpful please upvote it really helps thank you.FEel free to ask any doubt i will answer