A Corporation Reports the Following Year-End Stockholders' Equity Determine the Following:
(1)Par Value for the Preferred Stock

question 30

Essay

A corporation reports the following year-end stockholders' equity:
$\begin{array}{|l|r|}\hline\text { Contributed capital }\\\hline \text { Preferred stock, } 8 \%, 100,000 \text { shares authorized, } 50,000 \text { shares issued } & \$ 2,500,000 \\\hline \text { Contributed capital in excess of par, Preferred } & 125,000 \\\hline \text { Common stock, } \$ 10 \text { par, } 500,000 \text { shares authorized, } 400,000 \text { shares issued } & 4,000,000 \\\hline \text { Contributed capital in excess of par, Common } & \underline{1,200,000} \\\hline \text { Total contributed capital } & \$ 7,825,000 \\\hline \text { Retained earnings } & \underline{10,775,000} \\\hline \text { Total stockholders' equity } & \$ 18,600,000 \\\hline\end{array}$

Determine the following:
(1)Par value for the preferred stock.
(2)Book value per share for both preferred stock and common stock assuming a call price per share of $52 for preferred and no dividends in arrears.

Identify the financial statement presentation and implications of stock transactions, including underwriting and organizational costs.

Determine the effects of stock issuance and repurchase on shareholders’ equity.

Apply knowledge of cumulative preferred stock dividends and their impact on corporate obligations.

Understand the effects of quantity supplied being greater than quantity demanded.

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Definitions:

Opening Lines

The initial sentences of a speech, presentation, or written document, crucial for grabbing attention and setting the tone.

Indirect Approach

This strategy in communication entails providing background information and supporting details before presenting the main point.

Negative Message

Communication that delivers bad news or delivers information likely to disappoint or upset the recipient.

Obscure Bad News

Strategically minimizing the visibility or understanding of negative information or developments.