Nash Inc. began operations in January 2015 and reported the following results for each of its...

90.2K

Verified Solution

Question

Accounting

Nash Inc. began operations in January 2015 and reported thefollowing results for each of its 3 years of operations.
2015 $ 260,000 net loss
2016 $ 37,000 net loss
2017 $ 819,000 net income
At December 31, 2017, Nash Inc. capital accounts were asfollows.
7% cumulative preferred stock, par value $100; authorized,issued, and outstanding 4,700 shares $ 470,000 Common stock, parvalue $1.00; authorized 1,000,000 shares; issued and outstanding818,000 shares $ 818,000 Nash Inc. has never paid a cash or stockdividend. There has been no change in the capital accounts sinceNash began operations. The state law permits dividends only fromretained earnings.
(a) Compute the book value of the common stock at December 31,2017.

(b) Compute the book value of the common stock atDecember 31, 2017, assuming that the preferred stock has aliquidating value of $ 108 per share.

Answer & Explanation Solved by verified expert

3.9 Ratings (490 Votes)

Retained earnings balance Amount in 2015 260000 2016 37000 2017 819000 522000 Less preferred dividend 98700 Available to common stock holders 423300 A Compute the book value of the common stock at December 31 2017 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member