How do I determine the numerators for the preferred and common share? Required I

Question

How do I determine the numerators for the preferred and common share?

Required Information The folowing information apples to the questions displayed belowj Raphael Corporation's common stock is currently selling on a stock exchange at $177 per share, and its current balance sheet shows the following stockholders equity section: Preferred stock-5% cumulative. S-par value, 1,000 shares authorized, issued, and outstanding $ 100,000 Common stock-$__ par value, 4,000 shares authorized, issued, and outstanding 160,000 Retained earnings 320,000 Total stockholders' equity $ 580,000

Explanation / Answer

Book value per preferred share:

Book value per preferred share = Callable price per preferred share + Cumulative preferred dividend per share

                                                        = $110 per share + 5% on $100 per share ($100,000/1,000 shares) + 2 years

                                                        = $110 per share + $5 per share * 2 years

                                                       = $110 per share + $10 per share

                                                       = $120 per share

So Stockholders’ equity applicable to preferred shares is $120,000 ($120 per share * 1,000 preferred shares).

Book value per common share:

                                                           Total stockholders’ equity = $580,000

                                    Less: Total book value of Preferred stock = $120,000

Total book value of Common stock authorized, issued and outstanding = $460,000

    Divide: Number of shares authorized, issued and outstanding = 4,000 shares

                                                     Book value per Common share = $115 ($460,000/4,000 shares).   

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