Otter Tail, Inc., began operations in January 2012 and had the following reported net income or loss for each of its 5 years of operations:

2012 $150,000 loss

2013 130,000 loss

2014 120,000 loss

2015 250,000 income

2016 1,000,000 income

At December 31, 2016, Otter Tail's capital stock was comprised of the following:

Common stock, $10 par (100,000 shares authorized; 50,000 shares issued and outstanding) $500,000

Preferred stock, 4% noncumulative and nonparticipating, $100 par (1,000 shares authorized, issued, and outstanding) 100,000

Preferred stock, 8% cumulative and fully participating, $100 par (10,000 shares authorized, issued, and outstanding) 1,000,000

Otter Tail has never paid a cash or stock dividend. There has been no change in the capital accounts since Otter Tail began operations. The appropriate state law permits dividends only from retained earnings.

Required:

Prepare worksheet showing the maximum amount available for cash dividends on December 31, 2016. Round your answers to the nearest dollar.

OTTER TAIL, INC.

Maximum Cash Dividend Distribution

December 31, 2016

Common stock 4% Preferred stock 8% Preferred stock Total

8% preferred stock, dividends in arrears 2012-2015 $ $

4% preferred stock dividends for 2016 $ $

8% preferred stock dividends for 2016 $ $

Distribution of remaining retained earnings (Schedule 1) $ $ $

$ $ $ $

Complete statement showing how the dividends would be distributable to the holders of the common shares and preferred shares. Round your answers to the nearest dollar.

Distribution of Remaining Retained Earnings

Common stock 8% Preferred stock Total

Dividends on common stock at preferred rate $ $

Distribution of remaining retained earnings

Common stock $

8% preferred stock $ $

$ $ $