Based on the stockholders equity section of Velcro World, answer the following q

Question

Based on the stockholders equity section of Velcro World, answer the following questions. Remember that all amounts are presented in thousands.

If the common shares were issued at $21 per share, at what average price per share were the preferred shares issued?

If retained earnings at the beginning of the period was $241 million and $21 million was paid in dividends during the year, what was the net income for the year? (Enter your answer in millions.)

Explanation / Answer

Number of shares outstanding = Total value / Par value

common shares outstanding = 21000 / 1

                                                      = 21000shares

Preferred stock = 5100 / 1

                            = 5100 shares

Additional paid in capital = (Number of common shares*issue price) +(Number of preferred stock *Issue price)

Additional paid in capital of common stock per share = 21 -1 = 20        [issue price-par value]

  Additional paid in capital of preferred stock stock per share = X-1

   624,000 = (21000*20)+[5100*(X-1 )]

    624,000 = 441,000 + 5100X - 5100

    5100X = 624000-441000+ 5100

     X(issue price of preferred stock ) = 188100 /5100

                                                                =$ 36.88 per share

4)Net income = RE at end + Dividend -RE beginning

                        = 279,000,000 + 21,000,000 - 241,000,000

                        = 59000000 or 59 million

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