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# Understanding the Components of Stockholder's Equity

Book Value per Share of Common Stock

Shown below is information relating to the stockholders' equity of Earthling, Inc.

6% cumulative preferred stock, \$100 par \$ 600,000
Common stock, \$10 par, 1,000,000 shares authorized \$2,000,000
Additional paid-in capital common stock \$3,000,000
Additional paid-in capital preferred stock \$0
Retained Earnings \$1,000,000
Assume one year of dividends in arrears on preferred stock

1. The dollar amount of the preferred dividends in arrears (from above)

2. The number of shares of preferred stock outstanding

3. The number of shares of common stock outstanding

4. Average issue price per share of common stock

5. Total paid-in capital

6. Total stockholders' equity

7. Book value per share of common stock

#### Solution Preview

Book Value per Share of Common Stock

Shown below is information relating to the stockholders' equity of Earthling, Inc.

6% cumulative preferred stock, \$100 par \$ 600,000
Common stock, \$10 par, 1,000,000 shares authorized \$2,000,000
Additional paid-in capital common stock \$3,000,000
Additional paid-in capital preferred stock \$ 0
Retained Earnings ...

#### Solution Summary

Given the stockholder's equity section of a company, this solution illustrates how to determine (1) the amount of preferred dividends in arrears, (2) the number of common and preferred shares outstanding, (3) the average issue price of coon stock, (4) the total paid-in capital, (5) the total stockholders' equity, and (6) the book value per share of common stock.

\$2.19