Cartman’s Cats shows the following on the books:
Stockholder’s Equity: $54,000
Common Stock Book Value: $33,600
Preferred Stock Book Value: $20,400
If Cartman’s Cats has 1,000 shares of common stock outstanding, what is the book value per share?
Explanation
Answer - B - The book value per share of the common stock is $33.60:
Stockholder’s equity $54,000
Less Preferred Stock Book Value Total $20,400
Common Stock Book Value Total $33,600
# of Common Shares Outstanding 1,000
Book Value per Share $33.60
Key Takeaway: If the corporation has both common and preferred stock, the book value of the preferred stock is deducted from the stockholder’s equity to determine the total book value of the common stock.
