1. How much is the excess of par to be used for book value per share computation?2. How much is the BOOK VALUE PER SHARE for PREFERENCE shares considering that the preference shares are cumulative and participating? On December 31, 2021, the statement of financial position of FRUITS Company showed thefollowing shareholders' equity accounts:• Ordinary shares, par P50, authorized 100,000 shares, issued 85,000 shares, in treasury7,500 shares - P 4,250,00012% Preference shares, par P75, authorized 50,000 shares, issued 20,000 shares, intreasury 4,000 shares - P 1,500,000Share premium in excess of par - P 862,500Reserve for Treasury shares - P 725,000Treasury ordinary shares - P 435,000; Treasury preference shares - P 290,000Retained earnings, unrestricted -P 2,168,000Net income for the year - P 762,000Cash dividends declared - P 194,000; 2 years in arrears, current year is not yet included

In accounting, the value of an asset as it appears on a balance sheet and a measurement of a…

On December 31, 2021, the statement of financial position of FRUITS Company showed the following shareholders' equity accounts: • Ordinary shares, par $50, authorized 100,000 shares, issued 85,000 shares, in treasury 7,500 shares - 4,250,000 12% Preference shares, par $75, authorized 50,000 shares, issued 20,000 shares, in treasury 4,000 shares - 1,500,000 • Share premium in excess of par - 862,500 Reserve for Treasury shares - 725,000 Treasury ordinary shares - 435,000; Treasury preference shares - 290,000 Retained earnings, unrestricted - 2,168,000 Net income for the year - • Cash dividends declared - 762,000 194,000; 2 years in arrears, current year is not yet included

On December 31, 2021, the statement of financial position of FRUITS Company showed the following shareholders' equity accounts: • Ordinary shares, par $50, authorized 100,000 shares, issued 85,000 shares, in treasury 7,500 shares - 4,250,000 12% Preference shares, par $75, authorized 50,000 shares, issued 20,000 shares, in treasury 4,000 shares - 1,500,000 • Share premium in excess of par - 862,500 Reserve for Treasury shares - 725,000 Treasury ordinary shares - 435,000; Treasury preference shares - 290,000 Retained earnings, unrestricted - 2,168,000 Net income for the year - • Cash dividends declared - 762,000 194,000; 2 years in arrears, current year is not yet included

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

1. How much is the excess of par to be used for book value per share computation?

2. How much is the BOOK VALUE PER SHARE for PREFERENCE shares considering that the preference shares are cumulative and participating?

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 - P 4,250,000
12% Preference shares, par P75, authorized 50,000 shares, issued 20,000 shares, in
treasury 4,000 shares - P 1,500,000
Share premium in excess of par - P 862,500
Reserve for Treasury shares - P 725,000
Treasury ordinary shares - P 435,000; Treasury preference shares - P 290,000
Retained earnings, unrestricted -P 2,168,000
Net income for the year - P 762,000
Cash dividends declared - P 194,000; 2 years in arrears, current year is not yet included

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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Step 2: Requirement 1 - Computation of the excess of par to be used for book value per share computation

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