Mega Computer's financial statements show 1000 shares of common stock with a par value of $10 000, retained earnings of $20 000, additional paid in capital of $10 000, and long-term debt of $30 000. What is the book value of a share of stock?
A) $70.00
B) $10.00
C) $40.00
D) $30.00
E) $50.00

Question

Quizplus · Accepted Answer

The book value of a share of stock is calculated by adding the common stock's par value, additional paid-in capital, and retained earnings, then dividing by the number of shares. Here, ($10,000 + $10,000 + $20,000) / 1000 = $40.00 per share. Long-term debt is not included in this calculation.

Mega Computer's Financial Statements Show 1000 Shares of Common Stock