The year-end balance sheet of Columbus Products, Inc., includes the following st
ID: 2342664 • Letter: T
Question
The 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 Common stock, $5 par value, 5,000,000 shares authorized, 3,900,000 shares issued and $13,000,000 outstanding 19,500,000 Additional paid-in capital: 44,000,000 64,450,000 $140,950,000 Common stock Retained earnings Total stockholders' equity 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? Complete this question by entering your answers in the tabs below Required A Required B Required C Required D Required ERequired F How many shares of preferred stock have been issued? Number of shares issuedExplanation / Answer
Answer to Part a.
No. Of Preferred Stock issued = Preferred Stock Capital / Par Value of Preferred Stock
No. Of Preferred Stock issued = 13,000,000 / 100
No. Of Preferred Stock issued = 130,000 Shares
Answer to Part b.
Annual Dividend on Preferred Stock = 130,000 * $100 * 7%
Annual Dividend on Preferred Stock = $910,000
Answer to Part c.
Average Issuance Price of Common Stock = (Common Capital Stock + Additional Paid in Capital) / Common Dtock Issued
Average Issuance Price of Common Stock = (19,500,000 + 44,000,000) / 3,900,000
Average Issuance Price of Common Stock = 63,500,000 / 3,900,000
Average Issuance Price of Common Stock = $16.28
Answer to Part d.
Legal Capital = Preferred Capital Stock + Common Capital Stock
Legal Capital = $13,000,000 + $19,500,000
Legal Capital = $32,500,000
Total Paid in Capital = Legal Capital + Additional Paid in Capital
Total Paid in Capital = $32,500,000 + $44,000,000
Total Paid in Capital = $76,500,000
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