Exercise 18-18 (Algo) Effect of cumulative, nonparticipating preferred stock on dividends3 years [LO18-7]

The shareholders equity of ILP Industries includes the items shown below. The board of directors of ILP declared cash dividends of $11 million, $25 million, and $160 million in its first three years of operation2024, 2025, and 2026, respectively.

	($ in millions)
Common stock	$ 110
Paid-in capitalexcess of par, common	990
Preferred stock, 8%	250
Paid-in capitalexcess of par, preferred	565

Required:

1. Determine the amount of dividends to be paid to preferred and common shareholders in each of the three years, assuming that the preferred stock is cumulative and nonparticipating.
2. Determine the amount of dividends to be paid to preferred and common shareholders in each of the three years, assuming that the preferred stock is noncumulative and nonparticipating.