Question
Chicago Company reported the following information at the end of the current year: Common stock ( $10 par value; 43,000 shares outstanding) $ 430,000 Preferred
Chicago Company reported the following information at the end of the current year:
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| Common stock ( $10 par value; 43,000 shares outstanding) | $ | 430,000 |
| Preferred stock, 10% ( $10 par value; 8,800 shares outstanding) |
| 88,000 |
| Retained earnings |
| 285,000 |
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The board of directors is considering the distribution of a cash dividend to the two groups of stockholders. No dividends were declared during the previous two years. Assume the three cases below are independent of each other.
Case A: The preferred stock is noncumulative; the total amount of all dividends is $35,000.
Case B: The preferred stock is cumulative; the total amount of all dividends is $26,400.
Case C: The preferred stock is cumulative; the total amount of all dividends is $90,800 .
Require 2. Assume Chicago Company issued a 30 percent common stock dividend on the outstanding shares when the market value per share was $24. Fill in the table below to show how this stock dividend would compare to Case C. (Leave no cells blank - be certain to enter "0" wherever required.)
| AMOUNT OF DOLLAR INCREASE (DECREASE) |
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| Item | Cash DividendCase C |
| Stock Dividend |
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| Assets |
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| Liabilities |
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| Stockholders equity |
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Financial Accounting An Introduction To Concepts Methods And Uses
Authors: Clyde P. Stickney, Roman L. Weil
9th Edition
0030259622, 978-0030259623
