Nathans Athletic Apparel has 2,000 shares of 5%, $100 par value preferred stock the company issued at

Question:

Nathan’s Athletic Apparel has 2,000 shares of 5%, $100 par value preferred stock the company issued at the beginning of 2020. All remaining shares are common stock. The company was not able to pay dividends in 2020, but plans to pay dividends of $22,000 in 2021.

Required:

1. Assuming the preferred stock is cumulative, how much of the $22,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2021?

2. Assuming the preferred stock is noncumulative, how much of the $22,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2021?

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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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