Early in 2017, Herndon Industries was formed with authorization to issue 250,000 shares of $10 par value common stock and 30,000 shares of $100 par value cumulative preferred stock. During 2017, all the preferred stock was issued at par, and 120,000 shares of common stock were sold for $16 per share. The preferred stock is entitled to a dividend equal to 10 percent of its par value before any dividends are paid on the common stock.

During its first five years of business (2017 through 2021), the company earned income totaling $3,700,000 and paid dividends of 50 cents per share each year on the common stock outstanding.

On January 2, 2019, the company purchased 20,000 shares of its own common stock in the open market for $400,000. On January 2, 2021, it reissued 10,000 shares of this treasury stock for $250,000. The remaining 10,000 were still held in treasury at December 31, 2021.

Required:

a. Prepare the stockholders equity section of the balance sheet for Herndon Industries at December 31, 2021.

b. As of December 31, compute Herndons book value per share of common stock. (Hint: Book value per share is computed only on the shares of stock outstanding.)

c. At December 31, 2021, shares of the companys common stock were trading at $30. What would have happened to the market price per share had the company split its stock 3-for-1 at this date. What would have happened to the par value of the common stock and to the number of common shares outstanding.

Complete this question by entering your answers in the tabs below. Required A Required B Required Prepare the stockholders' equity section of the balance sheet for Herndon Industries at December 31, 2021. HERNDON INDUSTRIES Partial Balance Sheet December 31, 2021 Stockholders' equity 10% preferred stock, $100 par, cumulative, authorized, issued, and $ 3,000,000 outstanding 30,000 shares Common stock, $10 par, 250,000 shares authorized, 120,000 shares 1,200,000 issued Additional paid-in capital - Common stock 720,000 Additional paid-in capital - Treasury stock 50,000 Total paid-in capital Retained earnings Subtotal Less: Treasury stock Total stockholders' equity at Dec 31, 2021 $ 4,970,000 1,925,000 $ 6,895,000 (200,000) $ 6,695,000 Complete this question by entering your answers in the tabs below. Required A Required B Required As of December 31, compute Herndon's book value per share of common stock. (Hint: Book value per share is computed only on the shares of stock outstanding.) (Round your answer to 2 decimal places.) Book value per share Complete this question by entering your answers in the tabs below. Required A Required B Required C At December 31, 2021, shares of the company's common stock were trading at $30. What would have happened to the market price per share had the company split its stock 3-for-1 at this date. What would have happened to the par value of the common stock and to the number of common shares outstanding. Market price per share Par value Number of shares outstanding