Dexter Corporation has total paid-in capital of $140,000 and retained earnings of $90,000.It has 2,000 shares of $10 preferred stock outstanding with no dividends in arrears and 4,000 shares of $10 par value common stock outstanding.The book value of each share of common stock is:

Question

Quizplus · Accepted Answer

The book value per share of common stock is calculated by dividing the total equity available to common shareholders by the number of common shares outstanding. Total equity is the sum of paid-in capital and retained earnings minus the value of preferred stock. Here, total equity is $140,000 + $90,000 - (2,000 shares * $10) = $210,000 - $20,000 = $190,000. Dividing $190,000 by 4,000 common shares gives a book value of $47.50 per share.

Dexter Corporation Has Total Paid-In Capital of $140,000 and Retained