Question

The following is the stockholders' equity section of Harbor Co.'s balance sheet on December 31: Common stock $10 par, 100,000 shares authorized, 50,000 shares issued of which 5,000 have been reacquired, and are held in treasury $ 450,000 Additional paid-in capital common stock 1,100,000 Retained earnings 800,000 Subtotal $2,350,000 Less treasury stock (150,000) Total stockholders' equity $2,200,000 Harbor has insignificant amounts of convertible securities, stock warrants, and stock options. What is the book value per share of Harbor's common stock?

Answer 1

Answer:

The book value of shares is $10

Explanation:

The balance of shareholders equity is $2,200,000.This comprises of retained earnings of $800,000 and Issued Share Capital of $1,400,000(for 140,000 units of shares)

To ascertain the unit of shares,see below:

45000units= $450,000

15000units reacquired at $150,000

Which also means that $1,100,000 is for 110,000units of shares.

In each of these cases highlighted above share price is $10

for instance:$450,000/45000shares=$10

$150,000/15000=$10 e.t.c