Saguaro Corporation has total contributed capital of $840,000 and retained earnings of $427,000.It has 1,000 shares of $100 par value preferred stock with no dividends in arrears and 5,000 shares of $100 par value common stock.The preferred stock is callable at 105.The book value of each share of common stock is

Question

Quizplus · Accepted Answer

The book value of common stock is calculated as (Total Contributed Capital + Retained Earnings - Call Price of Preferred Stock) / Number of Common Shares. Here, it is ($840,000 + $427,000 - $105,000) / 5,000 = $232.40.

Saguaro Corporation Has Total Contributed Capital of $840,000 and Retained