Question

The stockholders’ equity section of the balance sheet for Mann Equipment Co. at December 31, Year...

The stockholders’ equity section of the balance sheet for Mann Equipment Co. at December 31, Year 2, is as follows. Stockholders’ Equity Paid-in capital Preferred stock, ? par value, 6% cumulative, 250,000 shares authorized, 55,000 shares issued and outstanding $ 550,000 Common stock, $20 stated value, 300,000 shares authorized, 55,000 shares issued and ?? shares outstanding 1,100,000 Paid-in capital in excess of par—Preferred 45,000 Paid-in capital in excess of stated value—Common 165,000 Total paid-in capital $ 1,860,000 Retained earnings 400,000 Treasury stock, 8,000 shares (40,000 ) Total stockholders’ equity $ 2,220,000 Note: The market value per share of the common stock is $40, and the market value per share of the preferred stock is $27.

Required

a.What is the par value per share of the preferred stock?

b.What is the dividend per share on the preferred stock?

c. What is the number of common stock shares outstanding?

d. What was the average issue price per share (price for which the stock was issued) of the common stock?

f. If Mann Equipment Company declared a 2-for-1 stock split on the common stock, how many shares would be outstanding after the split? What amount would be transferred from the Retained Earnings account because of the stock split? Theoretically, what would be the market price of the common stock immediately after the stock split?

Complete this question by entering your answers in the tabs below.

  • Req A to D
  • Req F

a.What is the par value per share of the preferred stock?
b.What is the dividend per share on the preferred stock? (Round your answer to 2 decimal places.)
c.What is the number of common stock shares outstanding?
d.What was the average issue price per share (price for which the stock was issued) of the common stock? (Round your answer to nearest whole dollar.)

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Homework Answers

Answer #1
a] Par value per share of preferred stock = 550000/50000 = $ 11.00
b] Dividend per share on preferred stock = 11*6% = $               0.66
c] Number of common stock shares outstanding = 55000-8000 = 47000
d] Average issue price of common stock = (1100000+165000)/55000 = $ 23.00
f] Shares oustanding after split = (55000-8000)*2 = 94000
No amount will be transferred from the RE account as a stock split only increases the number of shares without affecting equity values.
Market price immediately after split = $40/2 = $            20.00
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