Question

Required information Problem 13-5A Computing book values and dividend allocations LO C2, A4 [The following information applies to the questions displayed below.) Raphael Corporation's balance sheet shows the following stockholders' equity section. $ 100,000 Preferred stock-5% cumulative, $__par value, 1,000 shares authorized, issued, and outstanding Common stock-$_ par value, 4,000 shares authorized, issued, and outstanding Retained earnings Total stockholders' equity 180,000 360,000 $ 640,000 Problem 13-5A Part 1 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. Calculation of Par Value of Preferred Stock and Common Stock: Corporation's preferred stock $100,000/1,000 Shares = $100.00 Per Preferred Share Corporation's common stock $180,000/4000 Shares = $45.00 Per Common Share 2. If No dividends are in arrears at the Current date, Calculation of Book Value per share of Common Stock: $ $ 180,000.00 350,000.00 540,000.00 Common Stock issued and outstanding Retained Earnings Sub total Less: Preferred Dividend ($100,000 x 5%) Total Book Value Number of Outstanding Shares $ (5,000.00) 535,000.00 4000 Book Value Per Share 133.75

3. If two year's dividends are in arrears at the Current date, Calculation of Book Value per share of Common Stock: $ 180,000.00 360,000.00 540,000.00 Common Stock issued and outstanding Retained Earnings Sub total Less: Arrear Preferred Dividend ($100,000 x 5% x 2) Total Book Value Number of Outstanding Shares $ $ (10,000.00) 530,000.00 4000 Book Value Per Share 132.50 4. If two year's preferred dividends are in arrears at the current date and the board of directors declares cash dividends of $24,000: Total Amount paid to the preferred shareholders ($100,000 x 5% x 2 Years) 10,000.00 Total Amount paid to the common shareholders 14,000.00 Total Cash Dividends Paid $ 24,000.00 A