Question

Barney Corporation recognized a $100 million preferred stock balance on 12/31/2019.

On January 1, 2020, Barney issued $10 million in preferred dividends.

On the same date, Barney raised an additional $20 million via a new issuance of preferred stock.

On December 31, 2020, the market value of the original amount of preferred shares rose $5 million.

Under US GAAP, the 12/31/2020 year ending preferred stock balance is:___________.

A. $110m

B. $115m

C. $120m

D. $125m

Answer 1

C. $120m

Explanation:

As per the given situation, the calculation of the ended year the preferred stock is shown below:

Ending preferred stock balance

= Beginning balance of preferred stock + new issuance of preferred stock

= $100 million + $20 million

= $120 million

Therefore, for computing the ending preferred stock balance we simply applied the above formula and ignore all other values as they are not relevant. So the correct answer is C.