Winston Corporation has retained earnings of $400,000.It has 5,000 shares of 6 percent,$200 par value preferred stock outstanding that is callable at 102.The preferred stock is cumulative,and one year of dividends is in arrears.It also has 10,000 shares of $100 par value common stock outstanding.Assume all stock is issued at par.The book value of each share of preferred stock is

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The book value of each share of preferred stock is calculated by adding the par value, the call premium, and the dividends in arrears. The par value is $200, the call premium is 2% of $200, which is $4, and the dividends in arrears for one year is 6% of $200, which is $12. Therefore, the book value is $200 + $4 + $12 = $216.

Winston Corporation Has Retained Earnings of $400,000