Analyzing the stockholders’ equity section of the balance sheet [15-20 min]
The balance sheet of Buzzcraft, Inc., reported the following:
Preferred stock, $7 par, 5%, 1,000 shares authorized and issued................ | $ 7,000 |
Common stock, $1.50 par value, 43,000 shares authorized; 11,000 shares issued........................... | 16,500 |
Paid-in capital in excess of par—common ............... | 224,000 |
Total paid-in capital ................................ | 247,500 |
Retained earnings .................................. | 80,000 |
Total stockholders’ equity ........................... | $ 327,500 |
Preferred dividends are in arrears for two years, including the current year. On the balance sheet date, the market value of the Buzzcraft common stock was $28 per share.
Requirements
1. Is the preferred stock cumulative or noncumulative? How can you tell?
2. What is the total paid-in capital of the company?
3. What was the total market value of the common stock?
4. Compute the book value per share of the common stock.
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