Answer :
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.
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.
