Question

Simple Corporation has the following assets, liabilities, and equity accounts: Book value Market value Cash $4,200 $4,200 Accounts receivable $7,800 $7,600 Inventory $22,000 $28,000 Equipment $190,000 $172,200 Accounts payable $12,000 $12,000 Notes payable $140,000 $140,000 Common stock, 4,000 shares issued and outstanding $25,000 Retained earnings $47,000 What is the book value of a share of Simple stock?

Answer 1

The book value of a share of Simple stock is $18 per share

Step-by-step explanation:

The computation of the book value of a share is shown below

Book value per share = (Total equity) ÷ (number of shares)

where,

Total equity = Total issued shares value + retained earnings

= $25,000 + $47,000

= $72,000

And, the number of shares is 4,000 shares

Now put these values to the above formula

So, the value would be equal to

= $72,000 ÷ 4,000 shares

= $18 per share