The Red Hat Company began operations in January 2018 and reported the following results of operations for each of its first three years of operations: 2018- P 600,000; 2019- P 240,000 loss; 2020- P 3,900,000 profit. At December 31,2020, the company's capital accounts were as follows: 9% Cumulative Preference share capital, P 100 par; 100,000 shares authorized; 60,000 shares issued and outstanding P 6,000,000 Ordinary Share Capital, P 10 par; 1,000,000 shares authorized; 800,000 shares issued and outstanding 8,000,000 Red Hat Company has never paid a cash or bonus issue and there has been no change in the capital accounts since it began operations.
The Red Hat Company began operations in January 2018 and reported the following results of operations for each of its first three years of operations: 2018- P 600,000; 2019- P 240,000 loss; 2020- P 3,900,000 profit. At December 31,2020, the company's capital accounts were as follows: 9% Cumulative Preference share capital, P 100 par; 100,000 shares authorized; 60,000 shares issued and outstanding P 6,000,000 Ordinary Share Capital, P 10 par; 1,000,000 shares authorized; 800,000 shares issued and outstanding 8,000,000 Red Hat Company has never paid a cash or bonus issue and there has been no change in the capital accounts since it began operations.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:EXERCISE I 5
The Red Hat Company began operations in January 2018 and reported the following results of operations for each of
its first three years of operations: 2018- P 600,000; 2019- P 240,000 loss; 2020- P 3,900,000 profit.
At December 31,2020, the company's capital accounts were as follows:
9% Cumulative Preference share capital, P 100 par; 100,000 shares authorized;
60,000 shares issued and outstanding
P 6,000,000
Ordinary Share Capital, P 10 par; 1,000,000 shares authorized; 800,000 shares
issued and outstanding
8,000,000
Red Hat Company has never paid a cash or bonus issue and there has been no change in the capital accounts since it
began operations.
REQUIRED:
a.) Computation of book value per share of preference and ordinary share at December 31,2020.
b.) Assuming that the preference share has a liquidation value of P 105 per share, compute the book value per share of
the preference and ordinary share at December 31,2020.
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