On December 31, 2001, Dorsey Company reports the following amounts:

Preferred shares $1,100,000

Common shares 3,900,000

Retained earnings 1,780,000

The preferred shares are $7, no par value, cumulative and issued at $50 per share. One million common shares, issued at $39 per share, are issued.

INSTRUCTIONS:

Calculate the book value per common share for each of the following assumptions:

(a) There are no preferred dividends in arrears.

(b) Preferred dividends are two years in arrears.