Chapter 2: Q23BP (page 52)

Landers Nursery and Garden Stores has current assets of $220,000 and fixed assets of $170,000. Current liabilities are $80,000 and long-term liabilities are $140,000. There is $40,000 in preferred stock outstanding and the firm hasissued 25,000 shares of common stock. Compute book value (net worth)per share.

Short Answer

Expert verified

The book value per share of Landers Nursery and Garden Stores is $5.2.

Step by step solution

Total assets of Landers Nursery and Garden Stores

$\begin{array}{rcl} Total assets & = & Current assets + Fixed assets \\ = & $ 220, 000 + $ 170, 000 \\ = & $ 390, 000 \end{array}$

Total liabilities of Landers Nursery and Garden Stores

$\begin{array}{rcl} Total liablity & = & Current liability + Long - term liability + Preference Shares \\ = & $ 80, 000 + $ 140, 000 + $ 40, 000 \\ = & $ 260, 000 \end{array}$

Book value per share of Landers Nursery and Garden Stores

$\begin{array}{rcl} Book value per share & = & \frac{Total assets - Total liabilities}{No . of shares} \\ = & \frac{$ 390, 000 - $ 260, 000}{$ 25, 000} \\ = & 5.2 \end{array}$

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Retained earning	Bond payable
Accounts payable	Accrued wages payable
Prepaid expenses	Accounts receivable
Plant and equipment	Capital in excess of par
Inventory	Preferred stock
Common stock	Marketable security

Accumulated depreciation	\(309,000
Retained earnings	187,000
Cash	14,000
Bonds payable	136,000
Accounts receivable	54,000
Plant and equipment – original cost	775,000
Accounts payable	35,000
Allowance for bad debts	9,000
Common stock, \)1 par, 100,000 share outstanding	100,000
Inventory	70,000
Preferred stock, $59 par, 1,000 share outstanding	59,000
Marketable securities	24,000
Investments	20,000
Notes payable	34,000
Capital paid in excess of par (common stock)	88,000

Sales	\( 2790000
Cost of goods sold	1790000
Gross Profits	\)1000000
Selling and administrative expenses	302000
Operating profits	\(698000
Interest Expense	54800
Income before taxes	\)643200
Taxes30%	192960
Income after-tax	$ 450240

Short Answer

Step by step solution

Total assets of Landers Nursery and Garden Stores

Total liabilities of Landers Nursery and Garden Stores

Book value per share of Landers Nursery and Garden Stores

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