Analysis of Stockholders Equity The Stockholders Equity sect

Analysis of Stockholders\' Equity The Stockholders\' Equity section of the December 31, 2016, balance sheet of Eldon Company appeared as follows: Preferred stock, $.40 par value, 5,000 shares authorized, ? shares issued Common stock,? par, 10,000 shares authorized, $160,000 9,000 shares issued Additional paid-in capital-Preferred Additional paid-in capital-Common Additional paid-in capital Treasury stock Total contributed capital Retained earnings Treasury stock, preferred, 100 shares 90,000 7,200 720,000 1,400 $978,600 48,000 (3,100) Total stockholders\' equity

Solution

1. Number of shares of preferred stock issued = Value of preferred stock / Par value = 160,000 / 40 = 4000 shares.

2. Number of shares of preferred stock outstanding = Authorized preferred stock - Issued preferred stock = 5000 - 4000 = 1000 shares.

3. Average per share sale price of preferred stock = [Par value + Additional paid in capital(preferred)]/ number of shares issued = (160000 + 7200) / 4000 = 167200/4000 = $41.8

4. Par value of common stock = Value of common stock / Number of shares issued = 90000/9000 = $10.

5. Average per share sale price of common stock = [Par value + Additional paid in capital(common)]/ number of shares issued = (90000 + 720000) / 9000 = $90

6. Cost of treasury stock per share = Value of treasury stock / Number of treasury stock = 3100 / 100 = $31

7. Stock holders equity = Total Capital + Retained earnings - Treasury Stock = 978600 + 48000 - 3100 = $1,023,500

8. Per share book value of common stock = (Stock holders equity - Preferred Stock ) / Number of common shares

= (1023500 - 160000) / 9000 = $94.944