The equity section of Cyril Corporation\'s balance sheet shows the following Pre
ID: 2498172 • Letter: T
Question
The equity section of Cyril Corporation's balance sheet shows the following Preferred stock-4% cumulative, $25 par value, $30 call price 10,000 shares issued and outstanding Common stock-$10 par value, 35,000 shares issued and outstanding Retained earnings $ 250,000 350,000 267,500 Total stockholders' equity $ 867,500 Determine the book value per share of the preferred and common stock under two separate situations 1. No preferred dividends are in arrears. k Value Per Preferred Shar Choose Numerator: Choose Denominator: Book Value Per Preferred Share Book value per preferred share ook Value Per Comm on Share Choose Numerator: Choose Denominator: Book Value Per Common Share Book value per common s hareExplanation / Answer
Answer: 1 No Preferred dividend are in arrears
Book value per Preferred share(BVPS) =
{Total share holder's equity - common stock + Dividend in arrears(if)} / No of shares outstanding in preferresd shares
BVPS = ($867,500 - $350,000) / 10,000
= $517,500 / 10,000
BVPS = $51.75 per share of preferred stock
Book value per common share(BVCS) =
{Total share holder's equity - Preferred stock - Dividend in arrears(if)} / No of shares outstanding in preferresd shares
BVCS = { $867,500 - $250,000} / 35,000
= $617,500 / 35,000
BVCS = $17.64 per share of common stock
Answer:- 2 Preferred dividends are in arrears
Now calculate preferred dividend = preferred stock * 4% * 3(year)
= $250,000 * 4/100 *3
Preferred dividend of 3 years = $30,000
Book value per Preferred share(BVPS) =
{Total share holder's equity - common stock + Dividend in arrears} / No of shares outstanding in preferresd shares
BVPS = { $867,500 - $350,000 + $30,000} / 10,000
= $547,500 / 10,000
BVPS = $54.75 per share of preferred stock
Book value per common share(BVCS) =
{Total share holder's equity - Preferred stock - Dividend in arrears} / No of shares outstanding in preferresd shares
BVCS = { $867,500 - $250,000 - $30,000} / 35,000
= $587,500 / 35,000
BVCS = $16.785 per share of common stock
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