Patterson Research has 200 shares of 10%, $107 par value, preferred stock, and 2,000 shares of $17 par value common stock outstanding. Total paid-in capital is $50,000, and retained earnings are $0. There are one-year dividends in arrears on preferred stock. The book value per share on common stock is: (Round your answer to the nearest cent.)

Question

Quizplus · Accepted Answer

To find the book value per share of common stock, first calculate the total equity, which is the sum of paid-in capital and retained earnings ($50,000 + $0 = $50,000). Next, calculate the dividends in arrears for preferred stock: 200 shares * $107 par value * 10% = $2,140. Subtract this from total equity to get the equity available to common shareholders: $50,000 - $2,140 = $47,860. Finally, divide this by the number of common shares: $47,860 / 2,000 = $23.93.

Patterson Research Has 200 Shares of 10%, $107 Par Value