Question
Common stock (par $1; outstanding, 500,000 shares) $ 500,000 Preferred stock, 8% (par $10; outstanding, 21,000 shares) 210,000 Retained earnings 900,000 On December 31, 2015,
Common stock (par $1; outstanding, 500,000 shares) | $ | 500,000 |
Preferred stock, 8% (par $10; outstanding, 21,000 shares) | 210,000 | |
Retained earnings | 900,000 | |
On December 31, 2015, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2013 or 2014. |
Three independent cases are assumed: |
Case A: | The preferred stock is noncumulative; the total amount of 2015 dividends would be $30,000. |
Case B: | The preferred stock is cumulative; the total amount of 2015 dividends would be $30,000. Dividends were not in arrears prior to 2013. |
Case C: | Same as Case B, except the amount is $75,000. |
Required: | |
1-a. | Compute the amount of dividends in total payable to each class of stockholders if dividends were declared as described in each case. Need help with 1-b |
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