Thestockholders\' equity section of Montaigne Company\'s balance sheetfollows. T

Question

Thestockholders' equity section of Montaigne Company's balance sheetfollows. The preferred stock's call price is $40. Determine thebook value per share of the common stock. (Round youranswer to 2 decimal places. Omit the "$" sign in yourresponse.)

Preferredstock—5% cumulative, $10 par value, 20,000 shares authorized,issued and outstanding

$

200,000

Commonstock—$5 par value, 200,000 shares authorized, 150,000 sharesissued and outstanding

750,000

Retainedearnings

890,000

Total stockholders'equity

$

1,840,000

Book value of common shares

$

Thestockholders' equity section of Montaigne Company's balance sheetfollows. The preferred stock's call price is $40. Determine thebook value per share of the common stock. (Round youranswer to 2 decimal places. Omit the "$" sign in yourresponse.)

Explanation / Answer

Book value of common shares = common stock holder's equity /outstanding shares                                               = $18,40,000 / 1,50,000                                               = $ 12.26

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