The December 31,2016,the balance sheet of TXY reflected the following: Assume the company sold all of the assets at December 31,2016,at market value for cash; paid off the liabilities and distributed all of the remaining cash to the shareholders.The amount of cash per share that each common shareholder would receive would be:

Question

The December 31,2016,the balance sheet of TXY reflected the following:  Assume the company sold all of the assets at December 31,2016,at market value for cash; paid off the liabilities and distributed all of the remaining cash to the shareholders.The amount of cash per share that each common shareholder would receive would be:

Quizplus · Accepted Answer

To determine the cash per share, we need to subtract the liabilities from the assets and divide the result by the number of outstanding common shares.

Total assets = $40,000 + $20,000 + $10,000 = $70,000 
Total liabilities = $15,000 
Total equity = $55,000

Cash per share = (Total equity - Total liabilities) / Number of common shares 
Cash per share = ($55,000 - $15,000) / 5,000 shares = $6.07

Therefore, the cash per share that each common shareholder would receive is $6.07, option C.

The December 31,2016,the Balance Sheet of TXY Reflected the Following