Question

kroner company has the following stockholder's equity section: preferred stock. $ 10 par 86,000 common stock,$1.70...

kroner company has the following stockholder's equity section:

preferred stock. $ 10 par 86,000

common stock,$1.70 par 340,000

retained earnings 2,014,000

paid in capital in excess of par preferred 35,000

paid in capital in excess of par common 20,000

total stockholder's equity 2,495,000

if the preferred stock has a call price of $15 per share, and there are no dividends in arrears, what is the book value per share of the common stock?

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Answer #1

Book Value of Common Stock = Common Stock + Paid-in Capital in Excess of Par, Common + Retained Earnings
Book Value of Common Stock = $340,000 + $20,000 + $2,014,000
Book Value of Common Stock = $2,374,000

Number of common stock outstanding = Common Stock / Par Value
Number of common stock outstanding = $340,000 / $1.70
Number of common stock outstanding = 200,000

Book Value per share of Common Stock = Book Value of Common Stock / Number of common stock outstanding
Book Value per share of Common Stock = $2,374,000 / 200,000
Book Value per share of Common Stock = $11.87

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