Answered

The following information is from the December 31, 2024, balance sheet of January Corporation:

Preferred Stock, [tex]$100 par
Paid-In Capital in Excess of Par-Preferred
Common Stock, $[/tex]1 par
Paid-In Capital in Excess of Par-Common
Retained Earnings
Total Stockholders' Equity

[tex]\[
\begin{tabular}{rl}
Preferred Stock, \$100 par & \$ 260,000 \\
Paid-In Capital in Excess of Par-Preferred & 14,000 \\
Common Stock, \$1 par & 71,000 \\
Paid-In Capital in Excess of Par-Common & 204,000 \\
Retained Earnings & 56,600 \\
\hline
Total Stockholders' Equity & \$ 605,600 \\
\end{tabular}
\][/tex]

What is the average issue price of the preferred stock shares? (Round your answer to the nearest dollar.)



Answer :

GinnyAnswer
To determine the average issue price of the preferred stock shares, we will follow these steps:

1. Identify the par value of the preferred stock:
The preferred stock has a par value of \[tex]$100 per share. 2. Determine the total value of preferred stock issued: The balance sheet reports the total value of the preferred stock as \$[/tex]260,000.

3. Identify the paid-in capital in excess of par value for the preferred stock:
This is an additional amount that shareholders paid over the par value and is reported as \[tex]$14,000. 4. Calculate the total value of preferred stock including the excess paid-in capital: The total value of the preferred stock including the paid-in capital in excess of par value is calculated as: \[ \$[/tex]260,000 + \[tex]$14,000 = \$[/tex]274,000
\]

5. Calculate the number of preferred shares issued:
The number of shares issued is calculated by dividing the total value of the preferred stock by the par value per share:
[tex]\[ \frac{\$260,000}{\$100} = 2600 \text{ shares} \][/tex]

6. Calculate the average issue price per preferred stock share:
The average issue price is calculated by dividing the total value of preferred stock including the paid-in capital by the number of shares issued:
[tex]\[ \frac{\$274,000}{2600 \text{ shares}} \approx \$105.385 \text{ per share} \][/tex]

7. Round the average issue price to the nearest dollar:
Rounding the calculated average issue price to the nearest dollar gives:
[tex]\[ \$105 \][/tex]

Thus, the average issue price of the preferred stock shares is \$105 per share.