Chapter 11, Problem 5PSA

To determine

Preferred Stock:

Preferred stock is a sort of stockholder‘s capital which has special right as comparison to equity to shareholder, like fixed dividend and preferential treatment in event of liquidation and payment of dividend.

Common Stock:

It shows the total amount of money that the owner has in this business. Owner use their right of being owner by voting for important matters in the general meetings of the company.

Dividends:

It is the amount of profit that is distributed among shareholders of the company. It can be distributed in two ways, one is cash dividend and other is stock dividend.

Market Value per Share:

It is the value of the share of the company in the market or in the stock exchange in which the company is listed.

(1)

To compute:

Market value of share.

To determine

(2)

To compute:

Par value of common stock and preferred stock.

To determine

(3)

To compute:

Book value of common stock with no arrears.

To determine

(4)

To compute:

Book value of common stock with arrears.

To determine

(5)

To compute:

Dividend paid to preferred and common shareholders and dividend per share for common stock.

To determine

(6)

To explain:

Reasons that contribute to difference between market and book value of share.