Wiggins Company has 1,000 shares of $10 par preferred stock,which were issued at par.It also has 25,000 shares of common stock outstanding,and its total stockholders' equity equals $500,000.The book value per common share is:
A)$16.00.
B)$19.60.
C)$19.96.
D)$20.00.
E)$10.00.

Question

Quizplus · Accepted Answer

The total amount of equity raised by the preferred stock is $10 x 1,000 = $10,000. This means that the remaining amount of equity is $500,000 - $10,000 = $490,000.

The book value per common share is calculated by dividing the remaining equity by the number of outstanding common shares:

Book value per common share = $490,000 / 25,000 = $19.60

Wiggins Company Has 1,000 Shares of $10 Par Preferred Stock,which