8% cumulative preferred stock, $100 par, 75,000 shares authorized $600,000 Common stock, $10 par, 500,000 shares authorized: 120,000 shares issued and $1,200,000 outstanding Additional paid-in capital: preferred stock $200,000 Additional paid-in capital: common stock $600,000 Retained earnings $50,000

8% cumulative preferred stock, $100 par, 75,000 shares authorized $600,000 Common stock, $10 par, 500,000 shares authorized: 120,000 shares issued and $1,200,000 outstanding Additional paid-in capital: preferred stock $200,000 Additional paid-in capital: common stock $600,000 Retained earnings $50,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

Shown below is information relating to the stockholders' equity of Mighty Corporation as of December 31,
2020.
8% cumulative preferred stock, $100 par, 75,000 shares authorized
$600,000
Common stock, $10 par, 500,000 shares authorized; 120,000 shares issued and $1,200,000
outstanding
Additional paid-in capital: preferred stock
$200,000
Additional paid-in capital: common stock
S600,000
Retained earnings
$50,000
What was the average issue price per share of common stock?
Select one:
O a. $15.00 per share.
O b. $8.00 per share.
O c. $2.40 per share.
O d. $10.00 per share.

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