Paul Bunyan is the owner of noncumulative 8 percent preferred stock in the Broadview Corporation, which had no earnings or profits in 2013. In 2014, the corporation had large profits and a surplus from which it might properly have declared dividends. The directors refused to do so, however, instead using the surplus to purchase goods necessary for the corporations expanding business. The corporation earned a small profit in 2015. The directors at the end of 2015 declared a 10 percent dividend on the common stock and an 8 percent dividend on the preferred stock without paying preferred dividends for 2014.

Is Bunyan entitled to dividends for 2013? For 2014? Explain

Is Bunyan entitled to a dividend of 10 percent rather than 8 percent in 2015? Explain

Would your answer be different if the stock was cumulative? Explain

Would your answer be different if the stock was participating? Explain