On December 31, Elker Corporation reports the following amounts under stockholders' equity on the balance sheet:
5% Preferred Stock, $50 par $1,000,000
Common Stock, $10 par 4,400,000
Paid-in Capital in Excess of Par—Common 1,000,000
Retained Earnings 4,125,000
Treasury Stock, 50,000 shares (200,000 )
There are no preferred dividends in arrears. The redemption value of the preferred stock is $1,600,000. What is the book value per share? (Round your final answer to the nearest cent.)
A) $26.99
B) $19.81
C) $22.37
D) $31.60
C
Explanation: C) Preferred Stock $1,000,000 + Common Stock $4,400,000 + Paid-in Capital in Excess of Par $1,000,000 + Retained Earnings $4,125,000 - Treasury Stock $200,000 - Redemption Value Preferred Stock $1,600,000 = $8,725,000
Book value per share = $8,725,000 ÷ (440,000 - 50,000 ) = $22.37
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