Tower Corp. had the following stock outstanding and Retained Earnings at December 31, 2018: Common Stock (par
Question:
Tower Corp. had the following stock outstanding and Retained Earnings at December 31, 2018:
Common Stock (par $8; outstanding, 30,000 shares).......................$240,000
Preferred Stock, 8% (par $10; outstanding, 6,000 shares)................60,000
Retained Earnings...................................................................................280,000
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, and none have been declared yet in 2018. Three independent cases are assumed:
Case A: The preferred stock is noncumulative; the total amount of 2018 dividends would be $12,600.
Case B: The preferred stock is cumulative; the total amount of 2018 dividends would be $14,400. Dividends were not in arrears prior to 2016.
Case C: Same as Case B, except the total dividends are $66,000.
Required:
Compute the amount of 2018 dividends, in total and per share, that would be payable to each class of stockholders if dividends were declared as described in each case. Show computations.
DistributionThe 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...
Step by Step Answer:
Case A x Preferred is noncumulative total amount to distribute 12...View the full answer
Fundamentals of Financial Accounting
ISBN: 978-1259864230
6th edition
Authors: Fred Phillips, Robert Libby, Patricia Libby
