1 File Edit View History Bookmarks Window Help ezto.mheducation.com The stockhol

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1 File Edit View History Bookmarks Window Help ezto.mheducation.com The stockholders' equity section of the balance sheet for Mann Equipment Co. at December 31, 2016, is as follows: Stockholders' Equity Paid-in capital Preferred stock, ? par value, 5% cumulative. 130,000 shares authorized, 43,000 shares issued and outstanding $516,000 Common stock, $12 stated value, 180,000 shares authorized, 43,000 shares issued and outstanding Paid-in capital in excess of par-Preferred Paid-in capital in excess of stated value-Common 516,000 33,000 258,000 1,323,000 280,000 Total paid-in capital Retained eamings Total stockholders' equity $1,603,000 Note: The market value per share of the common stock is $32, and the market value per share of the preferred stock is $15. Required a. What is the par value per share of the preferred stock? share b. What is the dividend per share on the preferred stock? (Round your answer to 2 decimal places.) per share

Explanation / Answer

Requirement a Par value per share of preferred stock is = preferred stock par value amount/Number of shares outstanding. = 516000/43000 = 12 b Dividend per share on preferred stock = % of dividend on preferred stock at par value amount*par valueper share of preferred stock. = 5%*12 = 0.6 c The average issuce price per share of common stock = (Common stock stated atpar value+Paid in capital in excess of stated value)/Number of shares outstanding = (516000+258000)/180000 = 4.3 d The amount that will be transferred from retained earning because of stocks split. = No. of shares outstanding after the split is = 180000+180000 360000 = Since this large stock split, nothing will be transferred from retained earnings The answer is 0 Theoratically, market price of common stock after split is = Totat market capitalization before splits/No. of shares outstnading after split = (180000*15)/360000 = 7.5

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