Please refer to the equity section of the balance sheet, below:
$\begin{array}{|l|l|}
\hline\text { Preferred stock, } \$ 50 \text { par, } 4 \% \text {, cumulative } & \$ 5,000 \
\hline 1,000 \text { shares authorized, } 100 \text { shares outstanding } & \
\hline \text { Common stock, } \$ 0.01 \text { par } & 120\\hline 1,000,000 \text { shares authorized, } 12,000 \text { shares outstanding } & \
\hline \text { Paid-in capital in exces of par } & 359,600 \
\hline \text { Retained earnings } & 153,280 \
\hline \text { Total stockholders' equity } & \$ 518,000\
\hline
\end{array}$
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Assume there are $600 of preferred dividends in arrears which includes the current year. What is the book value per share of preferred stock?

Question

Quizplus · Accepted Answer

The book value per share of preferred stock is calculated by dividing the total equity attributable to preferred shares by the number of preferred shares outstanding. The equity attributable to preferred shares includes the par value of the preferred stock plus any dividends in arrears. Here, the par value is $5,000 (100 shares at $50 each) and there are $600 of dividends in arrears, making the total equity $5,600. Dividing this by the 100 shares outstanding gives a book value of $56.00 per share.

Please Refer to the Equity Section of the Balance Sheet