DeTech Corporation€™s common shares are currently selling on a stock exchange at $85 per share, and a recent balance sheet shows the following information:

Required
Preparation Component:
1. What is the market value of the corporation€™s common shares?
2. How much capital was contributed by the residual owners of the company?
3. If no dividends are in arrears, what are the book values per share of the preferred shares and the common shares?
4. If two years€™ preferred dividends are in arrears, what are the book values per share of the preferred shares and the common shares?
5. If two years€™ preferred dividends are in arrears and the board of directors declares dividends of
$10,000, what total amount will be paid to preferred and common shareholders? What is the amount of dividends per share for the common shares?
Analysis Component: What are some factors that may contribute to the difference between the book value of common shares and their marketvalue?

Transcribed Image Text:

DeTech Corporation Equity Section of Balance Sheet April 30, 2014 Contributed capital: Preferred shares, $2.50 cumulative, 1,000 shares authorized, issued and outstanding....S 80,000 Common shares, 4,000 shares authorized, issued, and outstanding128,000 Total contributed capital....$208,000 Retained earning. Total equity $448,000