When Ching Corporation was organized in January Year 1, it immediately issued 10,000 shares of $50 par,
Question:
When Ching Corporation was organized in January Year 1, it immediately issued 10,000 shares of $50 par, 5 percent, cumulative preferred stock and 15,000 shares of $10 par common stock. The company’s earnings history is as follows: Year 1, net loss of $18,000; Year 2, net income of $95,000; Year 3, net income of $90,000. The corporation did not pay a dividend in Year 1.
Required
a. How much is the dividend arrearage as of January 1, Year 2?
b. Assume that the board of directors declares a $65,000 cash dividend at the end of Year 2 (remember that the Year 1 and Year 2 preferred dividends are due). How will the dividend be divided between the preferred and common stockholders?
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...
Step by Step Answer:
Computation of Preferred Dividends Par x Dividend Dividend per Share x Number of Shares Outst...View the full answer
Introductory Financial Accounting for Business
ISBN: 978-1260299441
1st edition
Authors: Thomas Edmonds, Christopher Edmonds
