The balance sheet of Alex Bros. follows: Of the 200,000 common shares authorized, 50,000 shares were issued

Question:

The balance sheet of Alex Bros. follows:

Liabilities Preferred stock Common stock Additional paid-in capital (C/S) Retained earnings Less: Treasury stock Total l

Of the 200,000 common shares authorized, 50,000 shares were issued for $8 each when the company began operation. There have been no common stock issuances since; 45,000 shares are currently outstanding, and 5,000 shares are held in treasury. Net income for year just ended was $45,000.
Required
(a) Compute the par value of the issued common shares.
(b) Compute the book value of each common share.
(c) At what average price were the treasury shares purchased?
(d) Alex is considering reissuing the 5,000 treasury shares at the present market price of $10 per share. What effect would this action have on the company's debt/equity ratio, book value per outstanding share, and earnings-per-shareratio?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...