DIVIDEND ALLOCATIONS Situation 1 Espino Company has the following stock outstanding: Common Stock Preferred Stock 100,000 shares..9,000

Question:

DIVIDEND ALLOCATIONS

Situation 1 Espino Company has the following stock outstanding:

Common Stock Preferred Stock

100,000 shares………………..9,000 shares

$0.50 par value……………….$20 par, $2 dividend

The amount available for dividends this year is $50,000. Prepare the dividend allocation between the preferred and common shares.

Situation 2 Chiola Corporation has the following stock outstanding:

Common Stock Preferred Stock

40,000 shares……………….Cumulative: 4,000 shares

$1 par value…………………….$40 par, $2 dividend

………………………………Noncumulative: 5,000 shares

………………………………….$40 par, $2 dividend

No dividends were declared in year 1 of operation. In year 2, there is $56,000 available for dividends. Prepare the dividend allocation between the preferred and common shares.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...