Question

C14 #2 Weygandt, Accounting Principles, 13e Help System Announcements Exercise 14-19 a-b At December 31, Pharoah Corporation has total stockholders' equity of $3,100,000. Included in this total are preferred stock $750,000 and paid-in capital in excess of par preferred stock $49,800. There are 15,000 shares of $50 par value 7% cumulative preferred stock outstanding. At year-end, 250,000 shares of common stock are outstanding Compute the book value per share of common stock under each of the following assumptions. (Round answers to 2 decimal places, e.g. 15.25.) (a) (b) There are no preferred dividends in arrears, and the preferred stock does not have a call price. Preferred dividends are one year in arrears, and the preferred stock has a call price of $60 per share. (a) (b) Book value per share Click if you would like to Show Work for this question: Open Show Work Question Attempts: 0 of 3 usedSAVE FOR LATER SUBMIT ANSWER
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Answer 1

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Pharaoh Corporation
Answer to a
Calculation of Book Value per share
	Amount $
Total Equity	3,100,000.00
Less:
Preferred Stock value	750,000.00
Value of Common stock and retained earnings	2,350,000.00	N
Number of Common Shares outstanding	250,000.00	L
Book Value per share	9.40	O=N/L
So book value per share is $ 9.40.
Answer to b
Calculation of arrear Preferred dividend		Note
Preferred Stock value	750,000.00	A
Dividend rate	7%	B
Arrear Dividend	52,500.00	C=A*B
Calculation of excess payment in case of redemption of Preferred Shares
Call value per share	60.00	D
Par Value	50.00	E
Difference	10.00	F=D-E
Number of Preferred Shares	15,000.00	G
Total value	150,000.00	H=F*G
Less: Paid in capital in excess of Par Preferred Stock	49,800.00	I
Excess payment upon redemption of Preferred Shares	100,200.00	J=H-I
Calculation of Book Value per share
	Amount $
Total Equity	3,100,000.00
Less:
Preferred Stock value	750,000.00
Paid in capital in excess of par Preferred Stock	49,800.00
Arrear Dividend	52,500.00	See C
Excess payment upon redemption of Preferred Shares	100,200.00	See J
Value of Common stock and retained earnings	2,147,500.00	K
Number of Common Shares outstanding	250,000.00	See L
Book Value per share	8.59	M=K/L
So book value per share is $ 8.59.