The Clockwork Corporation had the following stock outstanding from 20x6 through 20x9:

Preferred stock: $100 par value, 8 percent cumulative, 10,000 shares authorized, issued, and outstanding Common stock: $10 par value, 200,000 shares authorized, issued, and outstanding The company paid $60,000, $60,000, $188,000, and $260,000 in dividends during 20x6, 20x7, 20x8, and 20x9, respectively. The market price per common share was $7.25 and $8.00 per share at the end of years 20x8 and 20x9, respectively.

Required 1. Determine the dividends per share and the total dividends paid to common stockholders and preferred stockholders in 20x6, 20x7, 20x8, and 20x9.

2. Perform the same computations, with the assumption that the preferred stock was noncumulative.

3. Calculate the 20x8 and 20x9 dividends yield for common stock, using the dividends per share computed in requirement 2.

4. User Insight: How are cumulative preferred stock and noncumulative preferred stock similar to long-term bonds? How do they differ from long-term bonds?

Comprehensive Stockholders’ Equity Transactions and Stockholders’ Equity