Question

The Quiet Canyon Hotel & Spa provides the following information on the shareholders' equity from its balance sheet:

7% Preferred stock, $50 par, callable at $57
30,000 shares authorized and 25,000 shares issued $1,425,000
Common stock, $7 par value
1,500,000 shares authorized, 1,000,000 shares issued ?
Additional paid-in capital--Common stock 12,000,000
Retained earnings 9,000,000
Based on this information, the value of the common stocks is equal to:

Answer 1

The value of the common stocks of the Quiet Canyon Hotel & Spa is calculated by adding the par value of the issued common stock, which is $7,000,000, to the additional paid-in capital of $12,000,000, resulting in a total common stock value of $19,000,000.

Step-by-step explanation:

The student is asking about the common stock value of the Quiet Canyon Hotel & Spa from its balance sheet. To calculate this, we first need to account for the par value of the issued common stock, which is 1,000,000 shares at a par value of $7 per share. This gives us:

• Common stock (at par value) = 1,000,000 shares × $7/share = $7,000,000

Since the balance sheet also includes additional paid-in capital for common stock of $12,000,000, we add this value to the par value of the common stock to find the total value.

• Total common stock value = $7,000,000 (par value) + $12,000,000 (additional paid-in capital) = $19,000,000

Therefore, the value of the common stocks is $19,000,000.