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The following information pertains to Parsons Co.: Preferred stock, cumulative: Par value per share $100 Dividend...

The following information pertains to Parsons Co.: Preferred stock, cumulative: Par value per share $100 Dividend rate 8% Shares outstanding 10,000 Dividends in arrears none Common stock: Par value per share $10 Shares issued 115,000 Dividends paid per share $2.20 Market price per share $49 Additional paid-in capital $520,000 Unappropriated retained earnings (after closing) $250,000 Retained earnings appropriated for contingencies $280,000 Common treasury stock: Number of shares 10,000 Total cost $260,000 Net income

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Answer #1

a) Total stockholder's equity in the Balance sheet = preferred stock [10000 * $100] + common stock [115000*$10]+ Additional paid-in capital [$520,000] + Unappropriated retained earnings (after closing) [ $250,000] + Retained earnings appropriated for contingencies [$280,000] - Common treasury stock [260000]

= $1000000 + $1150000 + $520,000 + 250,000 + $280,000 - 260000

= $2940000

c) Book value of common stock = [Total stockholder's equity - preferred stock] / [common stock issued - number of treasury stock]

= [$2940000 - $1000000 / [115000 - 10000]

= $1940000 /105000

= $18.48

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