Sabino Corporation's total common stock was $500,000 at the end of both Year 2 and Year 1.The par value of common stock is $5 per share.The company's total stockholders' equity at the end of Year 2 amounted to $1,125,000 and at the end of Year 1 to $1,090,000.The company's total liabilities and stockholders' equity at the end of Year 2 amounted to $1,581,000 and at the end of Year 1 to $1,540,000.The company's retained earnings at the end of Year 2 amounted to $545,000 and at the end of Year 1 to $510,000.The company's net income in Year 2 was $39,000.The company's book value per share at the end of Year 2 is closest to:

A) $0.39 per share
B) $15.81 per share
C) $11.25 per share
D) $5.45 per share

Question

Riley Wallace · Accepted Answer

Final Answer : C, Explanation :  Step 1: Calculate the total number of common shares outstanding at the end of both years.Total common shares outstanding = Total common stock / Par value per shareTotal common shares outstanding = $500,000 / $5 per share = 100,000 sharesStep 2: Calculate the total contributed capital at the end of Year 2.Total contributed capital = Total stockholders' equity - Retained earningsTotal contributed capital = $1,125,000 - $545,000 = $580,000Step 3: Calculate the book value per share at the end of Year 2.Book value per share = Total contributed capital / Total common shares outstandingBook value per share = $580,000 / 100,000 shares = $11.50 per shareTherefore, the closest option is C) $11.25 per share. Book value per share = Common stockholders' equity ÷ Number of common shares outstanding*= $1,125,000 ÷ 100,000 shares = $11.25 per share (rounded)*Number of common shares outstanding = Common stock ÷ Par value= $500,000 ÷ $5 per share = 100,000 sharesReference: CH14-Ref1Nickolls Corporation has provided the following financial data:

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