Answered: Makati Corporation’s current balance… | bartleby

Makati Corporation’s current balance sheet reports the following shareholder’s equity balances: 5% cumulative preference share, P100 par value, 2,500 shares issued and outstanding P 250,000 Ordinary share, P3.50 par value, 100,000 shares issued and outstanding 350, 000 Share Premium 125,000 Retained Earnings 300,000 Dividends in arrears on the preference share amount to P25, 000. If Makati were to be liquidated, the preference shareholders would receive par value plus a premium of P50,000. The book value per share is a. P7.75 b. P7.50 c. P7.25 d. P7.00

FINANCIAL ACCOUNTING

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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Question

Makati Corporation’s current balance sheet reports the following
shareholder’s equity balances:

5% cumulative preference share, P100 par
value, 2,500 shares issued and outstanding P 250,000

Ordinary share, P3.50 par value, 100,000 shares
issued and outstanding 350, 000
Share Premium 125,000
Retained Earnings 300,000
Dividends in arrears on the preference share amount to P25, 000. If Makati were to be liquidated,
the preference shareholders would receive par value plus a premium of P50,000. The book value per share is

a. P7.75
b. P7.50

c. P7.25
d. P7.00

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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The following figures have been extracted from the financial statements of KND Ltd: Book Value of Current Assets $45 million and Current Liabilities $34.75 million 11% Debentures: $27 million debentures issued at $1,000. Long-term Loan: $7.18 million Preference Share Capital: 8.8 million shares issued at $2 per share Retained Earnings: $28.30 million Ordinary Share Capital: 39 million shares issued at $1 per share General Reserves $9.20 million The following additional information has been provided by the manager of the company: Government bonds are currently yielding 6.3% per annum. The current market return on equity is estimated to be 13.5% per annum. Debenture coupons are paid annually, with 16 years to maturity. The company tax rate is 34%. The loan requires a 9% p.a. interest payment, compounded monthly. A merchant banker suggests that KND Ltd would have to offer a rate of 13.9% p.a. on any new issue of 16-year debentures. 12% Preference shares of KND Ltd are currently…
How much is the BOOK VALUE PER SHARE for PREFERENCE shares considering that the preference shares are cumulative and participating?
9A. How much is the excess of par to be used for book value per share computation? 9B. How much is the BOOK VALUE PER SHARE for PREFERENCE shares considering that the preference shares are cumulative and participating? (Present answer in 2 decimal places, example: XX.XX) On December 31, 2021, the statement of financial position of FRUITS Company showed the following shareholders equity accounts: • Ordinary shares, par P50, authorized 100,000 shares, issued 85,000 shares, in treasury 7,500 shares - P4,250,000 12% Preference shares, par P75, authorized 50,000 shares, issued 20,000 shares, in treasury 4,000 shares-P1,500,000 Share premium in excess of par-P 862,500 . Reserve for Treasury shares - 725,000 • Treasury ordinary shares-435,000, Treasury preference shares-P 290,000 • Retained earnings, unrestricted-P 2,168,000 Net income for the year - 762,000 Cash dividends declared - P 194,000; 2 years in arrears, current year is not yet included.

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