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LO 1 1 - 4 , 1 1 - 6 , 1 1 - 8 Comparing Stock and Cash Dividends ( P 1 1 -

LO11-4,11-6,11-8
Comparing Stock and Cash Dividends (P11-8)
Kainen Company reported the following information at the end of the year:
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 $25.000.
Case B: The preferred stock is cumulative; the total amount of all dividends is $25,000.
Case C: The preferred stock is cumulative; the total amount of all dividends is $75,000.
Required:
Compute the amount of dividends, in total and per share, that would be payable to each class of stockholders for each case. Show
computations.
Assume Kainen Company issued a 40 percent common stock dividend on the outstanding shares when the market value per share
was $50. Fill in the table below to show how this stock dividend would compare to Case C.
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