The following information has been extracted from the balance sheet of ABC Corporation as on December 31, 2019.

• Total stockholders' equity: $25,000,000

• Preferred stock (issued and outstanding): $5,000,000

• Average No. of shares of common stock outstanding: 2,000,000 shares

On the basis of above information, the book value per share of common stock is

. Single choice.

a $15.00

b $10.00

c $ 2.5

d $12.5

Summary:

Option b is Correct : $ 10 per share.

Answer:

Book Value per share of Common Stock = Common Stockholders Equity / Average number of Common stock outstanding

Step 1: First we need to calculate Common Stockholders Equity

Common Stockholders Equity = Total Stockholders Equity - Preferred Stockholders Equity

Common Stockholders Equity = $ 25,000,000 - $ 5,000,000 = $ 20000000

Step 2: Average number of Common stock outstanding

Average number or Common Stock outstanding = 2,000,000

Step 3: Book Value per Common Stockholders Equity

= $ 20000000 / 2000000

= $ 10 per share

Therefore, Option b is correct.