Question

Required information (The following information applies to the questions displayed below.) Raphael Corporation's balance sheet shows the following stockholders' equity section. Preferred stock-5% cumulative, . authorized, issued, and outstanding Common stock-$ and outstanding Retained earnings par value, 1,000 shares $ 60,000 par value, 4,e00 shares authorized, issued, 140,000 400,000 s 600,000 Total stockholders equity 1. What are the par values of the corporation's preferred stock and its common stock? Par Value Corporation's preferred stock Corporation's common stock

Answer 1

1		Par Value
	Corporations Preferred stock($60,000/1000 shares)	60
	Corporations Common stock($140,000/4000 shares)	35
2	Book value per share =Stockholders equity / No. of common shares
	Book value per share =$600,000 / 4,000 shares =$150 per share
3	If 2 years of preferred dividend are in arrears then the dividend will be paid from the Retained earnings
	Preferred dividend for 2 years =$60,000*5%*2 years =$6,000
	Revised Stockholders equity =$600,000 - $6,000 =$594,000
	Book value per share =$594,000 / 4,000 shares =$148.50 per share
4		Par value per	Divdiend	Dividend per	Number of	Preferred Dividend
		Preferred share	Rate	Preferred share	Preferred share	for 1 year
	Calculation of Preferred Dividend	$60	5%	$3.00	1,000	$3,000
		Preferred dividend in arrears for 2 years =$3,000*2 =$6,000
		Total cash dividend paid	Paid to preferred($6,000+$3,000)	Paid to common
	Current Year	$15,800	$9,000	$6,800