Answered: The stockholders’ equity section of the…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The stockholders’ equity section of the balance sheet for Mann Equipment Co. at December 31, Year 2, is as follows.


Stockholders’ Equity
Paid-in capital
Preferred stock, ? par value, 4% cumulative,
190,000 shares authorized, 49,000 shares issued and outstanding	$	490,000
Common stock, $15 stated value, 240,000 shares authorized, 49,000 shares issued and ?? shares outstanding		735,000
Paid-in capital in excess of par—Preferred		39,000
Paid-in capital in excess of stated value—Common		147,000
Total paid-in capital			$	1,411,000
Retained earnings				340,000
Treasury stock, 8,000 shares				(30,000	)
Total stockholders’ equity			$	1,721,000

Note: The market value per share of the common stock is $30, and the market value per share of the preferred stock is $21.

Required

What is the par value per share of the preferred stock?
What is the dividend per share on the preferred stock?
What is the number of common stock shares outstanding?
What was the average issue price per share (price for which the stock was issued) of the common stock?
If Mann Equipment Company declared a 2-for-1 stock split on the common stock, how many shares would be outstanding after the split? What amount would be transferred from the Retained Earnings account because of the stock split? Theoretically, what would be the market price of the common stock immediately after the stock split?

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