Ex 11.5 The year-end balance sheet of Jackson Products, INC., includes the following stockholders' equity section (with certain details ommited):

Stockholders' equity:
Capital stock:
7% cumulative preferred stock, $100 par value----$15,000,000
Common stock, $5 par value, 5,000,000 shares authorized, 4,000,000 shares issued and outstanding--------20,000,000
Additional paid-in capital:
Commond stock---------------------------44,000,000
Retained earnings-----------------------64,450,000
Total stockholder' equity---------------$143,450,000

From this information, compute answers to the following questions:

a. How many shares of preferred stock have been issued?
b. What is the total amount of the annual dividends to which preferred stockholders are entitled
C. Average price for insurance price per common stock?
D. What is the amount of legal capital and the amount of total paid-in capital?
e.What is the book value per share of common stock?

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a. To determine the number of shares of preferred stock that have been issued, divide the total value of preferred stock by the par value per share:

Number of shares of preferred stock issued = Preferred stock value / Par value per share
Number of shares of preferred stock issued = $15,000,000 / $100

The number of shares of preferred stock issued is 150,000.

b. The annual dividend entitlement for preferred stockholders can be calculated by multiplying the number of shares of preferred stock issued by the dividend rate:

Total amount of annual dividends for preferred stockholders = Number of shares of preferred stock issued * Dividend rate
Total amount of annual dividends for preferred stockholders = 150,000 * 7%

The total amount of annual dividends for preferred stockholders is $1,050,000.

c. To calculate the average price per common stock, divide the additional paid-in capital for common stock by the number of shares issued:

Average price per common stock = Additional paid-in capital for common stock / Number of shares of common stock issued
Average price per common stock = $44,000,000 / 4,000,000

The average price per common stock is $11.

d. The amount of legal capital is the sum of the preferred stock value and common stock value, which is $15,000,000 + $20,000,000 = $35,000,000.

The amount of total paid-in capital is the sum of the legal capital and additional paid-in capital for common stock, which is $35,000,000 + $44,000,000 = $79,000,000.

e. To calculate the book value per share of common stock, divide the total stockholders' equity (excluding preferred stock) by the number of shares of common stock issued:

Book value per share of common stock = (Total stockholders' equity - Preferred stock value) / Number of shares of common stock issued
Book value per share of common stock = ($143,450,000 - $15,000,000) / 4,000,000

The book value per share of common stock is $32.8625.

To answer the questions based on the given information, we need to analyze the stockholders' equity section of the balance sheet of Jackson Products, INC. Breaking it down:

a. How many shares of preferred stock have been issued?
The number of preferred stock shares issued is not specifically mentioned in the information provided. To determine the number of shares issued, we can divide the total value of preferred stock ($15,000,000) by the par value of each share ($100).
Number of preferred stock shares issued = Preferred stock value / Par value per share
Number of preferred stock shares issued = $15,000,000 / $100 = 150,000 shares

b. What is the total amount of the annual dividends to which preferred stockholders are entitled?
To determine the total amount of annual dividends to which preferred stockholders are entitled, we need to multiply the number of preferred stock shares issued (150,000 shares) by the stated dividend rate of 7% and the par value per share ($100).
Total annual dividends = Number of preferred stock shares issued x Dividend rate x Par value per share
Total annual dividends = 150,000 shares x 7% x $100 = $1,050,000

c. Average price for insurance price per common stock?
The given information does not include the insurance price per common stock. The average price for common stock can be calculated using the total value of common stock and the number of common stock shares issued.
Average price per common stock = Value of common stock / Number of common stock shares issued
Average price per common stock = $44,000,000 / 4,000,000 shares
Average price per common stock = $11

d. What is the amount of legal capital and the amount of total paid-in capital?
Legal capital refers to the portion of the stockholders' equity that represents the par value of both preferred and common stocks. In this case, legal capital is calculated by adding the par value of preferred stock and the par value of common stock.
Legal capital = Par value of preferred stock + Par value of common stock
Legal capital = (Number of preferred stock shares issued x Par value per share) + (Number of common stock shares issued x Par value per share)
Legal capital = (150,000 shares x $100) + (4,000,000 shares x $5)
Legal capital = $15,000,000 + $20,000,000
Legal capital = $35,000,000

Total paid-in capital is the sum of the par value of all issued shares, in addition to any additional paid-in capital.
Total paid-in capital = Legal capital + Additional paid-in capital
Total paid-in capital = $35,000,000 + $44,000,000
Total paid-in capital = $79,000,000

e. What is the book value per share of common stock?
The book value per share of common stock is calculated by dividing the total stockholders' equity (excluding preferred stock) by the number of common stock shares issued.
Book value per share of common stock = (Total stockholders' equity - Preferred stock value) / Number of common stock shares issued
Book value per share of common stock = ($143,450,000 - $15,000,000) / 4,000,000 shares
Book value per share of common stock = $128,450,000 / 4,000,000 shares
Book value per share of common stock = $32.11

Therefore, the answers to the questions are as follows:
a. 150,000 shares of preferred stock have been issued.
b. The total amount of annual dividends to which preferred stockholders are entitled is $1,050,000.
c. The average price for insurance price per common stock is $11.
d. The amount of legal capital is $35,000,000, and the amount of total paid-in capital is $79,000,000.
e. The book value per share of common stock is $32.11.