The records of Hoffman Company reflected the following balances in the stockholders equity accounts at December 31, 2015: Common stock, par $12 per share, 44,500 shares outstanding. Preferred stock, 8 percent, par $19 per share, 6,810 shares outstanding. Retained earnings, $229,000.

On January 1, 2016, the board of directors was considering the distribution of a $62,900 cash dividend. No dividends were paid during 2014 and 2015. Required:

1. Determine the total and per-share amounts that would be paid to the common stockholders and to the preferred stockholders under two independent assumptions: a. The preferred stock is noncumulative. (Round "Per Share" to 2 decimal places and rest to the nearest dollar amount.)

b. The preferred stock is cumulative. (Round "Per Share" to 2 decimal places and rest to the nearest dollar amount.)

2. Why were the dividends per share of common stock less for the cumulative preferred stock than the noncumulative preferred stock?

The dividend rate for preferred stockholders was increased. The dividends in arrears on the preferred stock had to be fulfilled before dividends could be paid for the current year.

3. What factors would cause a more favorable dividend for the common stockholders? (Select all that apply.)