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Exercise 15-24 Johnstone Inc. began operations in January 2014 and reported the following results for each...

Exercise 15-24

Johnstone Inc. began operations in January 2014 and reported the following results for each of its 3 years of operations.

2014

$260,000 net loss

2015

$40,000 net loss

2016

$700,000 net income

At December 31, 2016, Johnstone Inc. share capital accounts were as follows.

Share Capital—Preference, 6% cumulative, par value $100; authorized, issued, and outstanding 5,000 shares		$500,000
Share Capital—Ordinary, par value $1.00; authorized 1,000,000 shares; issued and outstanding 750,000 shares		$750,000

Johnstone Inc. has never paid a cash or share dividend. There has been no change in the share capital accounts since Johnstone began operations. The country law permits dividends only from retained earnings.


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Compute the book value of the ordinary shares at December 31, 2016. (Round answer to 2 decimal places, e.g. 1.25.)

Book value of the ordinary shares

$

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Compute the book value of the ordinary shares at December 31, 2016, assuming that the preference shares have a liquidating value of $106 per share. (Round answer to 2 decimal places, e.g. 1.25.)

Book value of the ordinary shares

$

Expert Solution

ekkarill92 answered 1 year ago

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