Question

A Identifying sources of equity, stock issuance, and dividends

Voyage Comfort Specialists, Inc. reported the following stockholders’ equity on its balance sheet at June 30, 2018:

Preferred Stock—7%, ? Par Value; 625,000 shares

authorized, 280,000 shares issued and outstanding

Paid-In Capital:

\( 1,400,000

1,340,000

Stockholders’ Equity

Paid-In Capital in Excess of Par—Common 2,900,000

Total Paid-In Capital 5,640,000

Retained Earnings 12,000,000

Total Stockholders’ Equity \) 17,640,000

Common Stock—$1 Par Value; 3,000,000 shares

authorized, 1,340,000 shares issued and outstanding

Requirements

2. What is the par value per share of Voyage Comfort Specialists’ preferred stock?

Short answer

The par value per share of the corporation’s preferred stock is $5

Step-by-step solution

Basic Introduction-

$\begin{array}{c}\text{Priceofprefferedstock}=\frac{\text{Paid-incapital}}{\text{Sharesisuued}}\\ =\frac{\$1,400,000}{280,000}\\ =\$5\end{array}$

$\begin{array}{c}\text{Preferredstock}=\text{Sharesissued}\times \text{Price}\\ =280,000\times \$5\\ =\$1,400,000\end{array}$

Par value of preferred stock

Preferred Stock—7%, $5 Par Value; 625,000 shares were authorized out of which 280,000 shares issued and outstanding.