Chapter 11, Problem 11.26E

(a)

To determine

Stockholders’ equity:

The claims of owners on a company’s resources, after the liabilities are paid off, are referred to as stockholders’ equity. Therefore, stockholders’ equity is sometimes referred to as net worth of owners or shareholders or stockholders.

Stockholders’ Equity Section:

Stockholder’s equity section is the section of the balance sheet that shows the available balance stockholders’ equity as on reported date at the end of the financial year.

Book value per share:

Book value per share refers to the amount of equity a common stockholder has in the net assets of the corporation from owning one share of stock.

To compute: The book value per share of common stock assuming that there are no preferred dividends in arrears, and the preferred stock does not have a call price.

(b)

To determine

To compute: The book value per share of common stock assuming that preference dividends are one year in arrears, and the preferred stock has a call price of $60 per share.