Raphael Corporations common stock is currently selling on a stock exchange at $ 85 per share, and

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Raphael Corporation’s common stock is currently selling on a stock exchange at $ 85 per share, and its current balance sheet shows the following stockholders’ equity section:
Preferred stock— 5% cumulative, $___ par value, 1,000 shares
authorized, issued, and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000
Common stock—$___ par value, 4,000 shares authorized, issued,
and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 280,000

Required
(Round per share amounts to cents.)
1. What is the current market value (price) of this corporation’s common stock?
2. What are the par values of the corporation’s preferred stock and its common stock?
3. If no dividends are in arrears, what are the book values per share of the preferred stock and the common stock?
4. If two years’ preferred dividends are in arrears, what are the book values per share of the preferred stock and the common stock?
5. If two years’ preferred dividends are in arrears and the preferred stock is callable at $ 55 per share, what are the book values per share of the preferred stock and the common stock?
6. If two years’ preferred dividends are in arrears and the board of directors declares cash dividends of $ 11,500, what total amount will be paid to the preferred and to the common shareholders? What is the amount of dividends per share for the common stock?
Analysis Component
7. What are some factors that can contribute to a difference between the book value of common stock and its market value (price)?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Related Book For  book-img-for-question

Fundamental accounting principle

ISBN: 978-0078025587

21st edition

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

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