Required: Using the information provided, calculate book value per common share

Question

Required:
Using the information provided, calculate book value per common share assuming. (Round the final answers to 2 decimal places.)
a. There are no dividends in arrears.
b. There are three years of dividends in arrears.

Western Grass Inc. Equity Section of Balance Sheet December 31, 2017   Contributed capital:      Preferred shares, $5 cumulative, 10,000 shares authorized,
       issued and outstanding $ 125,000     Common shares, 100,000 shares authorized; 70,000 shares
      issued and outstanding 595,000      Total contributed capital $ 720,000   Retained earnings 611,000   Total equity $ 1,331,000

Explanation / Answer

a Book Value of Common shares=(595000+611000)/70000= $17.23 b Preferred dividends outstanding = 10000*5*3 = $150000 Book Value of Common shares=(595000+611000-150000)/70000= $15.09

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