Provide a rationale for buying or not buying this stock

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Reference no: EM132045741

Uzi Company received a charter granting the right to issue 200,000 shares of $1.00 par value common stock and 10,000 shares of 8% cumulative and nonparticipating, $50.00 par value preferred stock that is callable at $80.00 per share.

Selected transactions are presented below. 20x1 Feb 19 Issued 45,000 shares of common stock at par for cash. Feb 22 Gave the corporation's promoters 30,000 shares of common stock for their services in getting the corporation organized. The directors valued the services at $50,000.

March 30 Exchanged 100,000 shares of common stock for the following assets at fair market values: land, $25,000; building, $100,000; and machinery, $125,000. Dec 31 Closed the Income Summary account.

A $25,000 loss was incurred 20x2 Jan 12 Issued 1,000 shares of preferred stock at $75 per share. Dec 15 The board of directors declared an 8% dividend on preferred shares and $0.10 per share on outstanding common shares, payable on January 31 to the January 17 stockholders of record. Dec 31 Closed the Income Summary account. A $69,000 net income was earned. 20x3 Jan 31 Paid the previously declared dividends.

Provide a rationale between 200 and 300 words in length for buying or not buying this stock based on the financial information presented.

Reference no: EM132045741

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