Question

Raphael Corporation’s common stock is currently selling on a stock exchange at $157 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 $ 85,000 Common stock—$___ par value, 4,000 shares authorized, issued, and outstanding 140,000 Retained earnings 350,000 Total stockholders’ equity $ 575,000 2. What are the par values of the corporation's preferred stock and its common stock?

Answer 1

Answer:

$85 per share and $35 per share

Explanation:

According to the scenario, computation of the given data are as follow:-

We can calculate the par of shares by using following formula:-

Corporation’s Preferred Stock‘s Par Value is

= Preferred Equity ÷ No. of Preferred Outstanding Shares  

= $85,000 ÷ 1,000

= $85 per share

Corporation’s Common Stock‘s Par Value is

= Common Equity ÷ No. of Common Outstanding Shares  

= $140,000 ÷ 4,000

= $35 per share