Hunter Manufacturing Inc.'s December 31,2014 balance sheet showed total common equity of $2,050,000 and 100,000 shares of stock outstanding.During 2015,Hunter had $250,000 of net income,and it paid out $100,000 as dividends.What was the book value per share at 12/31/2015,assuming that Hunter neither issued nor retired any common stock during 2015?

Question

Quizplus · Accepted Answer

The ending balance of total common equity for 2015 is the sum of the beginning balance of $2,050,000 and net income of $250,000 less dividends of $100,000:

Ending Common Equity = Beginning Common Equity + Net Income - Dividends
Ending Common Equity = $2,050,000 + $250,000 - $100,000
Ending Common Equity = $2,200,000

To find the book value per share, we divide the ending common equity by the number of shares outstanding:

Book Value per Share = Ending Common Equity / Number of Shares
Book Value per Share = $2,200,000 / 100,000
Book Value per Share = $22.00

Therefore, the correct choice is B) $22.00.