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.
