LI id to each class of stock. nmon stock of the corporation at December 31, 2011
ID: 2578369 • Letter: L
Question
LI id to each class of stock. nmon stock of the corporation at December 31, 2011, consists of 31, 2011, compute the amount 173 of Lang Corporation is selling on a stock exchange for $90 per share. The s'equity o sockholders' equitry Problem 12-6 Compute total market value for common stock; compute book value of common and preferred stock pai Preferred stock-99% cumulative. r value, $120 liquidation value, 120 ihares authorized, issued, and outstanding 3,000 stock-$72 par value, 30,000 shares authorized, issued (L.O. 6) $ 360,000 and outstanding 2,160,000 Total paid-in capital $2,520,000 354,000 $2,874,000 Retained earnings Total stockholders' equity in liquidation the preferred stock is entitled to par value plus cumulative unpaid dividends. is the total market value of all of the corporation's common stock? the book vse all dividend ave been paid on the preferred stock as of December 31, 2011, what are are the book valu Required b. iha book values of the preferred stock and the common stock c. If two ears' dividends were due on the preferred stock as of December 31, 2011, whatExplanation / Answer
a No. of Common stocks outstanding 30,000 Market price of the share $90/share Total Market value of the common stock $ 2,700,000 b If all the preferred stock dividend have been paid; Book value of Preferred stock: as on 12/31/2011 = No. of Pref stock * $120 $ 360,000 Book value of Common Stock: Total book value of stockholders equity 2,874,000 Less: book value of Pref stock 360,000 Book value of common stock 2,514,000 c If 2 years pref dividends were outstanding; 1. Book Value of Pref shares: Face value of 1 share * number of shares 360,000 Add: Outstanding dividends: year 1 dividend: (360000*9%) 32,400 year 2 dividend: (360000*9%) 32,400 Total book value of Pref shares 424,800 2. Book Value of Common Stock: Book value of Common stock as in (b) above 2,514,000 Less: Outstanding dividend payable to Pref sh 64,800 (32400+32400) Book value of Equity as on 31 dec 2011 2,449,200 Note: Dividend outstanding in respect of cumulative pref shares is a liability payable. This needs to be debited to P&L appropriation account and credited to pref shareholders account. Thus, to this extent, value of equity will get reduced (due to reduction in retained earnings)
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