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mamaluj [8]
3 years ago
7

Manning Company issued 10,000 shares of its $5 par value common stock having a fair value of $25 per share and 15,000 shares of

its $15 par value preferred stock having a fair value of $20 per share for a lump sum of $530,000. How much of the proceeds would be allocated to the common stock?
Business
1 answer:
Setler79 [48]3 years ago
4 0

Answer:

$240,909

Explanation:

Given:

Number of common stocks issued = 10,000

Value of common stock = $5

Fair value per share = $25

Number of shares of $15 par value = 15,000

preferred stock having a fair value of $20 per share = $530,000

Total market value of the stocks = 10,000 × $25 + 15,000 × 20 =  $550,000

Now,

The proceeds that would be allocated to the common stock will be

= \frac{\textup{Total fair value of common stocks}}{\textup{Total maket value of the stocks}}\times\textup{Preffered value of total stocks}

= \frac{10,000\times25}{550,000}\times530,000

= $240,909

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