12. The cumulative feature of preferred stock A) limits the amount of cumulative dividends to the par value of the preferred stock. B) requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders. C) means that the shareholder can accumulate preferred stock until it is equal to the par value of common stock at which time it can be converted into common stock. D) enables a preferred stockholder to accumulate dividends until they equal the par value of the stock and receive the stock in place of the cash dividends. 13. Masterson Company has 490,000 shares of $10 par value common stock outstanding. During the year Masterson declared a 15% stock dividend when the market price of the stock was $36 per share. Three months later Masterson declared a $.60 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by A) S2,984,100 B) $2,646,000 C) S D) S 462,000 485,100 14. Stock dividends distributable should be classified on the A) income statement as an expense. B) balance sheet as an asset. C) balance sheet as a liability D) balance sheet as an item of stockholders' equity. ysble