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CP11-4 Calculating Common and Preferred Cash Dividends [LO 11-2, LO 11-3, LO 11-4] Tower Corp. had the following stock outstanding and Retained Earnings at December
CP11-4 Calculating Common and Preferred Cash Dividends [LO 11-2, LO 11-3, LO 11-4] Tower Corp. had the following stock outstanding and Retained Earnings at December 31, 2018: Common Stock (par $8; outstanding, 28,000 shares) Preferred Stock, 8% (par $10; outstanding, 5,800 shares) Retained Earnings $ 224,000 58,000 278,000 On December 31, 2018, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2016 or 2017, and none have been declared yet in 2018. Three independent cases are assumed: Case A: The preferred stock is noncumulative; the total amount of 2018 dividends would be $12,400. Case B: The preferred stock is cumulative; the total amount of 2018 dividends would be $13,920. Dividends were not in arrears prior to 2016. Case C: Same as Case B, except the total dividends are $64,000. Required: 1-a. Compute the amount of 2018 dividends, in total that would be payable to each class of stockholders if dividends were declared as described in each case. TIP: Preferred stockholders with cumulative dividends are to be paid dividends for any prior years in arrears) and for the current year before common stockholders are paid. 1-b. Compute per case, the 2018 dividends per share, payable to each class of stockholders. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Compute the amount of 2018 dividends, in total that would be payable to each class of stockholders if dividends were declared as described in each case. TIP: Preferred stockholders with cumulative dividends are to be paid dividends for any prior years in arrears) and for the current year before common stockholders are paid. Case A Case B Case C Preferred Common Total
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