Question
In: Accounting
he year-end balance sheet of Columbus Products, Inc., includes the following stockholders’ equity section (with certain...
he year-end balance sheet of Columbus Products, Inc., includes the following stockholders’ equity section (with certain details omitted).
| Stockholders' equity: | |||
| Capital stock: | |||
| 7% cumulative preferred stock, $100 par value | $ | 13,000,000 | |
| Common stock, $5 par value, 5,000,000 shares authorized, 4,200,000 shares issued and outstanding | 21,000,000 | ||
| Additional paid-in capital: | |||
| Common stock | 41,000,000 | ||
| Retained earnings | 64,450,000 | ||
| Total stockholders’ equity | $ | 139,450,000 | |
From this information, compute answers to the following questions.
a. How many shares of preferred stock have been issued?
b. What is the total amount of the annual dividends to which preferred stockholders are entitled?
c. What was the average issuance price per share of common stock?
d. What is the amount of legal capital and the amount of total paid-in capital?
e. What is the book value per share of common stock, assuming no dividends in arrears?
f. Is it possible to determine the fair market value per share of common stock from the stockholders' equity section above?
Solutions
Expert Solution
Answer a. No. of preferred stock have been issued = 130000 shares
calculated a No. of preferred stock = $13000000/100 = 130000
Answer b. Annual dividend preferred stockholders are entitled = $910000
Calculated as preferred dividend = $13000000*7% = $910000
Answer c. Average issue price per common share = $14.76 per share
issue price for common stock = ($21000000+$41000000)/4200000 = $14.79 per share
Answer d. Legal Capital = 34000000 and paid in capital = 75000000
Calculated as
Legal capital = par value of common shares + stated value of preferred shares = $21000000+13000000 = 34000000
Paid in capital = $21000000+13000000+41000000 = $75000000
Answer e Book value per common share = $30.11 per share
Calculated as
Book value per share = Total Shareholder equity - Preferred share value/No. of Common shares
= (139450000-13000000)/4200000 = $30.11 per share
Answer f. No its is not possible from equity section as it is determined by market due to effect of many other factors
ekkarill92 answered 1 year agoRelated Solutions
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The year-end balance sheet of Knights, Inc., includes the
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100,000 shares
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3,400,000
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400,000
Retained earnings
3,160,000
Total stockholders’ equity
$18,160,000
Instructions
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The year-end balance sheet of Knights, Inc., includes the
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This section of the Balance Sheet will always equal total
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Corporations always must have at least two accounts in this
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list the errors the following stockholders equity
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capital—Preferred 9,000 Additional paid-in capital—Common 800,000
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2,316,000
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510,000
Retained earnings
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The following transactions affecting stockholders’ equity
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Jan.
8
Issued 15,000 shares of...
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