Ritz Company had the following stock outstanding and Retained Earnings at December 31, 2018: Common stock (par

Question:

Ritz Company had the following stock outstanding and Retained Earnings at December 31, 2018:

Common stock (par $1; outstanding, 500,000 shares)......................$500,000

Preferred stock, 8% (par $10; outstanding, 21,000 shares)...............210,000

Retained earnings..................................................................................900,000

On December 31, 2018, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2016 or 2017.  Three independent cases are assumed:

Case A: The preferred stock is noncumulative; the total amount of 2018 dividends would be $30,000.

Case B: The preferred stock is cumulative; the total amount of 2018 dividends would be $30,000. Dividends were not in arrears prior to 2016.

Case C: Same as Case B, except the amount is $75,000.


Required:

Compute the amount of dividends, in total and per share, payable to each class of stockholders if dividends were declared as described in each case. Show computations. Round per-share amounts to two decimal places.

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamentals of Financial Accounting

ISBN: 978-1259864230

6th edition

Authors: Fred Phillips, Robert Libby, Patricia Libby

Question Posted: