Divac Company has developed a statement of stockholders' equity for the year 2017 as follows: Preferred StockPaid-InCapital—PreferredCommon StockPaid-InCapital—CommonRetained EarningsBalance, Jan. 1$100,000$50,000$400,000$40,000$200,000Stock issued 100,00010,000 Net income 87,000Cash dividend -45,000Stock dividend10,0005,000 -15,000Balance, Dec. 31$110,000$55,000$500,000$50,000$227,000Divac’s preferred stock is $100 par, 8% stock. If the stock is liquidated or redeemed, stockholders are entitled to $120 per share. There are no dividends in arrears on the stock. The common stock has a par value of $5 per share. Assume that the common stockholders have a right to the total net income of $87,000.Determine the book value per share of Divac’s common stock. Round the book value per share to two decimals.$fill in the blank_____ per share

Here, Balance of Preferred Stock at the end of Dec,31 is $110,000 Paid in Preferred Capital is…

Answered: Divac Company has developed a statement…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter11: Stockholders' Equity

Section: Chapter Questions

Problem 11.16E

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Divac Company has developed a statement of stockholders' equity for the year 2017 as follows:

	Preferred Stock	Paid-In Capital— Preferred	Common Stock	Paid-In Capital— Common	Retained Earnings
Balance, Jan. 1	$100,000	$50,000	$400,000	$40,000	$200,000
Stock issued			100,000	10,000
Net income					87,000
Cash dividend					-45,000
Stock dividend	10,000	5,000			-15,000
Balance, Dec. 31	$110,000	$55,000	$500,000	$50,000	$227,000

Divac’s preferred stock is $100 par, 8% stock. If the stock is liquidated or redeemed, stockholders are entitled to $120 per share. There are no dividends in arrears on the stock. The common stock has a par value of $5 per share. Assume that the common stockholders have a right to the total net income of $87,000.

Determine the book value per share of Divac’s common stock. Round the book value per share to two decimals.
$fill in the blank_____ per share

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