(solution) Financial Accounting- Equity & book value

(solution) Financial Accounting- Equity & book value

Toleman Biochemicals decided to offer shares to the public for the first time on January 1st 2007. Toleman were authorized to sell 100,000 Preferred shares with a par value of $ 5 each and 1,000,000 Common shares with a par value of $ 10 each. By December 31st 2007 all of the Preferred shares had been sold at their par value and 700,000 Common shares had been sold at an average price of $ 15 each. On November 18 th 2007 Toleman had bought back 50,000 Common shares for $ 16 per share in order to have treasury stock that could be used for executive stock options. Net Income for 2007 was $ 1,462,500 At the end of 2007 a dividend of $ 1 per Common share was declared. No dividend was given on Preferred shares. Retained earnings from previous years December 31st 2007 totaled $ 2,000,000. Required: a: Prepare the Equity section of Toleman’s Balance Sheet on December 31st 2007 ? b: What was the book value per share of the outstanding common shares on December 31st2007 ?