The following stockholders' equity accounts arranged alphabetically are in the ledger of McGrath Corporation at December 31, 2011.
Common Stock ($10 stated value) $1,500,000
Paid-in Capital from Treasury Stock 6,000
Paid-in Capital in Excess of Stated Value-Common Stock 690,000
Paid-in Capital in Excess of Par Value-Preferred Stock 288,400
Preferred Stock (8%, $100 par, noncumulative) 400,000
Retained Earnings 776,000
Treasury Stock-Common (8,000 shares) 88,000
Compute the book value per share of the common stock, assuming the preferred stock has a call price of $110 per share. (Round answer to 2 decimal places, e.g. 10.50.)
To compute the book value per share of the common stock, we need to calculate the total stockholders' equity attributable to common stock and then divide it by the total number of common shares outstanding.
Here's how you can calculate it:
1. Determine the total stockholders' equity attributable to common stock:
Common Stock ($10 stated value) = $1,500,000
Paid-in Capital from Treasury Stock = $6,000
Paid-in Capital in Excess of Stated Value-Common Stock = $690,000
Retained Earnings = $776,000
Total stockholders' equity attributable to common stock = Common Stock + Paid-in Capital from Treasury Stock + Paid-in Capital in Excess of Stated Value-Common Stock + Retained Earnings
Total stockholders' equity attributable to common stock = $1,500,000 + $6,000 + $690,000 + $776,000
2. Determine the total number of common shares outstanding:
Treasury Stock-Common (8,000 shares) = 8,000 shares
Total number of common shares outstanding = 8,000 shares
3. Calculate the book value per share of the common stock:
Book Value per share of common stock = Total stockholders' equity attributable to common stock / Total number of common shares outstanding
Book Value per share of common stock = (Total stockholders' equity attributable to common stock) / (Total number of common shares outstanding)
Now, let's plug in the values:
Book Value per share of common stock = ($1,500,000 + $6,000 + $690,000 + $776,000) / 8,000
Book Value per share of common stock = $2,972,000 / 8,000
Book Value per share of common stock = $371.50
Therefore, the book value per share of the common stock is $371.50.