Please Refer to the Equity Section of the Balance Sheet

question 75

Multiple Choice

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

• A) $42.70 per share
• B) $43.17 per share
• C) $56.00 per share
• D) $41.00 per share

---

Definitions:

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate manufacturing overhead costs to products.

Manufacturing Overhead

All indirect costs associated with manufacturing, excluding direct material and direct labor costs, such as utilities and rent for the manufacturing space.

Machine-Hours

A measure of the amount of time machines are used in the production process, used as a basis for allocating manufacturing overhead costs.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain constant regardless of the level of production, such as salaries of supervisors and rent of the factory building.