Question
In: Accounting
The equity section of the balance sheet of the Guts Company on December 31, 2010 shows...
The equity section of the balance sheet of the Guts Company on December 31, 2010 shows following items:
|
6% Cumulative preference share capital, P100 par value (liquidation value, P115 per share); Authorized, 6,000 shares; issued, 4,000 shares; in treasury, 600 shares |
P400,000 |
|
Ordinary share capital, P100 par value, authorized, 20,000 shares; issued and outstanding, 8,000 shares |
800,000 |
|
Share premium – preference shares |
150,000 |
|
Share premium – ordinary shares |
165,000 |
|
Retained earnings |
458,600 |
|
Reserve for bond retirement |
320,000 |
|
Treasury shares - preference, at cost |
84,000 |
REQUIRED
1) The book value per share of ordinary stock is
a.223.65 b.
224.78 c.223.70 d.121
2.) Assuming the preference share is participating, the book value
per share of ordinary stock is
a.204.35
b.187.56 c.223.70 d. 187.56
Solutions
Expert Solution
1.
| Equity Balance | 800,000.00 |
| Balances as per Working Note No.1 | 1,069,600.00 |
| Preference Share Dividend | - 20,400.00 |
| Preference Share liquidation premium | - 51,000.00 |
| Total | 1,798,200.00 |
| Divide by Outstanding Shares | 8,000.00 |
| Book value per share | 224.78 |
Working Note-
| Total Equity | 2,209,600.00 |
| Outstanding par value of PS | - 340,000.00 |
| Outstanding par value of OS | - 800,000.00 |
| 1,069,600.00 |
2)
| Equity Balance | 800,000.00 |
| Ordinary Share Dividend | 48,000.00 |
| Ordinary share Participation (800/1,140 x 950,200) | 666,807.00 |
| Total | 1,514,807.00 |
| Divide | 8,000.00 |
| Book Value Per Share | 189.35 |
Working Note-2
| Excess over Par | |
| Balances | 1,069,600.00 |
| Preference Share Dividend | - 20,400.00 |
| Preference Share liquidation premium | - 51,000.00 |
| Ordinary Share Dividend | - 48,000.00 |
| 950,200.00 |
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