Calgate Company had the following shares outstanding and retained earnings at December 31, 2014: Preferred shares, 4%

Question:

Calgate Company had the following shares outstanding and retained earnings at December 31, 2014:
Preferred shares, 4% (par value $ 25; outstanding, 10,000 shares) ...$ 250,000
Common shares (outstanding, 30,000 shares) ...........600,000
Retained earnings ........................281,000
The board of directors is considering the of a cash dividend to the two groups of shareholders. No dividends were declared during 2012 or 2013. Three independent cases are assumed:
Case A: The preferred shares are non- cumulative; the total amount of dividends is $ 51,000.
Case B: The preferred shares are cumulative; the total amount of dividends is $ 60,000.
Case C: Same as case B, except the amount is $ 96,000.
Required:
1. Compute the amount of dividends, in total and per share, that would be payable to each class of shareholders for each case. Show computations.
2. Assume that the company issued a 10 percent dividend on the outstanding common shares when the market value per share was $ 24. Complete the following comparative schedule for common shares only, including explanation of the differences.

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