1.
To identify: The numbers of shares of preferred stock have been issued.
1.

Answer to Problem 10.4AP
Number of preferred stock issued by the V World is 6,000,000 shares.
Explanation of Solution
Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock.
Compute the number of preferred stock issued by the V World:
Hence, the number of preferred stock issued by the V World is 6,000,000 shares.
2.
To identify: The numbers of shares of common stock have been issued.
2.

Answer to Problem 10.4AP
Number of common stock issued by the V World is 30,000,000 shares.
Explanation of Solution
Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend.
Compute the number of common stock issued by the V World:
Hence, the number of common stock issued by the V World is 30,000,000 shares.
3.
The average price per share at which the preferred share would have been issued.
3.

Answer to Problem 10.4AP
Average price per share for which the preferred share would have been issued is $50.
Explanation of Solution
Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock.
Step 1: Calculate total paid in capital for common stock.
Step 2: Calculate total paid in capital for preferred stock.
Step 3: Calculate the average price per share for which the preferred share would have been issued.
Hence, the average price per share for which the preferred share would have been issued is $50.
4.
The amount of net income for the year.
4.

Answer to Problem 10.4AP
The amount of net income for the year is $68,000.
Explanation of Solution
Net income: Net income is the excess amount of revenue which arises after deducting all the expenses of a company. In simple terms, it is the difference between total revenue and total expenses of the company.
Determine the amount of net income for the year as follows:
Hence, the amount of net income for the year is $68,000.
5.
The average cost per share of the treasury stock acquired.
5.

Answer to Problem 10.4AP
Average cost per share of the treasury stock acquired is $32.
Explanation of Solution
Treasury Stock: It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.
Hence, the average cost per share of the treasury stock acquired is $32.
Want to see more full solutions like this?
- Clarabell Incorporated uses the conventional retail method to estimate ending inventory. Cost data for the most recent quarter is shown below: Cost Retail Beginning inventory $ 122,000 $ 201,000 Net purchases 422,000 723,000 Net markups 53,000 Net markdowns 31,000 Net sales 695,000 The conventional cost-to-retail percentage is:arrow_forwardnonearrow_forwardCalculate the beginning cash balancearrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
