Analysis of Stockholders\' Equity The Stockholders\' Equity section of the Decem

Question

Analysis of Stockholders' Equity The Stockholders' Equity section of the December 31, 2016, balance sheet of Eldon Company appeared as follows: Preferred stock, $.40 par value, 5,000 shares authorized, ? shares issued Common stock,? par, 10,000 shares authorized, $160,000 9,000 shares issued Additional paid-in capital-Preferred Additional paid-in capital-Common Additional paid-in capital Treasury stock Total contributed capital Retained earnings Treasury stock, preferred, 100 shares 90,000 7,200 720,000 1,400 $978,600 48,000 (3,100) Total stockholders' equity

Explanation / Answer

1. Number of shares of preferred stock issued = Value of preferred stock / Par value = 160,000 / 40 = 4000 shares.

2. Number of shares of preferred stock outstanding = Authorized preferred stock - Issued preferred stock = 5000 - 4000 = 1000 shares.

3. Average per share sale price of preferred stock = [Par value + Additional paid in capital(preferred)]/ number of shares issued = (160000 + 7200) / 4000 = 167200/4000 = $41.8

4. Par value of common stock = Value of common stock / Number of shares issued = 90000/9000 = $10.

5. Average per share sale price of common stock = [Par value + Additional paid in capital(common)]/ number of shares issued = (90000 + 720000) / 9000 = $90

6. Cost of treasury stock per share = Value of treasury stock / Number of treasury stock = 3100 / 100 = $31

7. Stock holders equity = Total Capital + Retained earnings - Treasury Stock = 978600 + 48000 - 3100 = $1,023,500

8. Per share book value of common stock = (Stock holders equity - Preferred Stock ) / Number of common shares

= (1023500 - 160000) / 9000 = $94.944

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