Note: The market value per share of the common stock is $42, and the market valu
ID: 2570117 • Letter: N
Question
Note: The market value per share of the common stock is $42, and the market value per share of the preferred stock is $26.
Required
What is the par value per share of the preferred stock?
What is the dividend per share on the preferred stock?
What is the number of common stock shares outstanding?
What was the average issue price per share (price for which the stock was issued) of the common stock?
If Mann Equipment Company declared a 2-for-1 stock split on the common stock, how many shares will be outstanding after the split? What amount will be transferred from the retained earnings account because of the stock split? Theoretically, what will be the market price of the common stock immediately after the stock split?
Transcribed: The stockholders' equity section of the balance sheet for Mann Equipment Co. at December 31, 2018 is as follows Stockholders' Equity Paid-in capital Preferred stock, par value, 6% cumulative, 100,000 shares authorized, 10,000 shares issued and outstanding $ 200,000 Common stock, $10 stated value, 200,000 shares authorized, 100,000 shares issued and?? shares outstanding Paid-in capital in excess of par-Preferred Paid-in capital in excess of stated value-Common 1,000,000 25,000 500,000 1,725,000 420,000 Total paid-in capital Retained earnings 13,0e9) $2,132,000 Treasury stock, 1,000 shares Total stockholders' equity Note: The market value per share of the common stock is $42, and the market value per share of the preferred stock is $26 Required a. What is the par value per share of the preferred stock? b. What is the dividend per share on the preferred stock? c. What is the number of common stock shares outstanding? d. What was the average issue price per share (price for which the stock was issued) of the common stock? f. If Mann Equipment Company declared a 2-for-1 stock split on the common stock, how many shares will be outstanding after the split? What amount will be transferred from the retained earnings account because of the stock split? Theoretically, what will be the market price of the common stock immediately after the stock split?Explanation / Answer
Answer to Part a.
Par Value of Preferred Stock =Issued Preferred Stock Capital / No. of Preferred Stock issued
Par Value of Preferred Stock = 200,000 / 10,000
Par Value of Preferred Stock = $20
Answer to Part b.
Dividend per Share = Par Value * Dividend Rate
Dividend per Share = $20 *6% = $1.20
Answer to Part c.
Number of Common Stock issued = Issued Common Stock Capital / Par Value of Common Stock
Number of Common Stock issued = 1,000,000 / 10
Number of Common Stock issued = 100,000
Number of Common Stock outstanding = 100,000 – 1,000
Number of Common Stock outstanding = 99,000 shares
Answer to Part d.
Average issue Price = (Par Value of Issued Common Stock + Paid in Capital in excess of Capital) /no of stock issued
Average issue Price = (1,000,000 + 500,000) / 100,000
Average issue Price = 1,500,000 /100,000
Average issue Price = $15
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