The stockholders\' equity section of the balance sheet for Mann Equipment Co. at

Question

The stockholders' equity section of the balance sheet for Mann Equipment Co. at December 31, 2016, is as follows Stockholders' Equity Paid-in capital Preferred stock, ? par value, 4% cumulative 190,000 shares authorized, 49,000 shares issued $490,000 and outstanding Common stock, $15 stated value, 240,000 shares authorized, 49,000 shares issued and outstanding Paid-in capital in excess of par-Preferred Paid-in capital in excess of stated value-Common 735,000 39,000 147,000 Total paid-in capital Retained earnings 1,411,000 340,000 Total stockholders' equity $1,751,000 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 a. What is the par value per share of the preferred stock? Par value per share b. What is the dividend per share on the preferred stock? (Round your answer to 2 decimal places.) Dividend per share c. What was the average issue price per share (price for which the stock was issued) of the common stock? (Round your answer to 2 decimal places.) Average issue price per share e. If Mann declares a 2-for-1 stock split on the common stock, how many shares will be outstanding after the split? What amount will be transferred from the retained eamings account because of the stock split? Theoretically, what will be the market price of the common stock immediately after the stock split? Shares outstanding after the split Amount transferred form retained earmings Market price of common stock after split

Explanation / Answer

Solution:-

a) 49000 Preferred Stock issued for the Capital Amount Outstanding $ 490000

So Par Value per share is = 490000/49000= $10 Per share

b) Dividend Per Share on Preferred Stock

4% of Par Value per share

= 10*4% = $ 0.40 per share

c) Common Stock Capital Outstanding = $735000

Paid in Capital in Excess of Stated Value of Common Stock = $147000

Total Money Received by issuing 53000 shares of common stock = $882000

Average Issue Price = 882000/49000 = $18 per share

d) If common Stock split in 2 share for 1 share, then outstanding common stock will be double

= 49000*2 = 98000 Shares

No changes need to be made in retained earnings as because of stock split, nothing has been changed except the number of shares outstanding and its par value. Hence no amount need to transfer from Retained earnings.

Market prciess will get half of the current market value because of split in 2 for 1.So MV will be 30/2 = $15 per share

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.