Linzey Corporation has provided the following data: The company's net income in Year 2 was $33,000.The company's book value per share at the end of Year 2 is closest to:
A)$22.45 per share
B)$12.45 per share
C)$0.55 per share
D)$15.45 per share

Question

Linzey Corporation has provided the following data:  The company's net income in Year 2 was $33,000.The company's book value per share at the end of Year 2 is closest to:
A)$22.45 per share 
B)$12.45 per share 
C)$0.55 per share 
D)$15.45 per share

Quizplus · Accepted Answer

Book value per share = (total shareholder equity - preferred equity) / number of common shares outstanding
Total shareholder equity = total assets - total liabilities
From the given data, we can calculate:
Total shareholder equity at the end of Year 2 = $260,000 - $155,000 = $105,000
Common shares outstanding = $180,000 / $30 = 6,000 shares
Book value per share = ($105,000 - 0) / 6,000 shares = $17.50 per share
Therefore, the closest answer choice is D) $15.45 per share. Book value per share = Common stockholders' equity ÷ Number of common shares outstanding*
= $927,000 ÷ 60,000 shares = $15.45 per share (rounded)
*Number of common shares outstanding = Common stock ÷ Par value
= $120,000 ÷ $2 per share = 60,000 shares

Linzey Corporation Has Provided the Following Data: the Company's