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Question: Identifying sources of equity, stock issuance, and dividends

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

Preferred Stock—5%, ? Par Value; 625,000 shares

authorized, 325,000 shares issued and outstanding

Paid-In Capital:

\( 1,300,000

1,350,000

Stockholders’ Equity

Paid-In Capital in Excess of Par—Common 2,600,000

Total Paid-In Capital 5,250,000

Retained Earnings 11,800,000

Total Stockholders’ Equity \) 17,050,000

Common Stock—$1 Par Value; 7,000,000 shares

authorized, 1,350,000 shares issued and outstanding

Requirements

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

Step by step solution

01

Par value definition

Par value is the value set by a corporation's charter of a single share. It is not generally related to the actual value of the stock.

02

Calculation of preferred stock par value

$$\begin{gathered} \mathbf{Preferredstockparvalue}\mathbf{=}\frac{\mathbf{Amountofcapitalraised}}{\mathbf{Noofshares}} \\ \mathbf{=}\frac{\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{300}\mathbf{,}\mathbf{000}}{\mathbf{325}\mathbf{,}\mathbf{000}} \\ \mathbf{=}\mathbf{\$}\mathbf{4} \end{gathered}$$

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