On December 31, 2011, the stockholders’ equity section of Koval Corporation’s balance sheet appeared as follows:

The following are selected transactions involving stockholders’ equity in 2012:

Required:

1.       Record the above transactions in journal form.

2.       Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2012. Net loss for 2012 was $436,000. (Hint: Use T accounts to keep track of transactions.)

3.       Compute the book value per share for preferred and common stock (including common stock distributable) on December 31, 2011 and 2012, using end-of-year shares outstanding. What effect would you expect the change in book value to have on the market price per share of the company’s stock?