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Question 3: (4 marks: each case 2 marks) Sigma Corporation was organized on January 1, 2010. During its first year, the corporation issued 50,000 shares

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Question 3: (4 marks: each case 2 marks) Sigma Corporation was organized on January 1, 2010. During its first year, the corporation issued 50,000 shares of S15 par value preferred stock and 150,000 shares of $5 par value common stock. At December 31, the company declared the following cash dividends: 2010 $ 70,000 2011 S 90,000 2012 $ 100,000 Instructions (a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 10% and not cumulative. (1 mark) (b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 12% and cumulative. (1 mark) dividend rather than cash (c) Why corporations issue stock dividend. (2 marks) Solution Question 3: (a) Common Total Preferred 2010 2011 2012 Preferred Common Total 2010 2011 2012

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