The records of Hoffman Company reflected the following balances in the stockholders equity accounts at December 31, 2018:

Common stock, par $12 per share, 44,000 shares outstanding.

Preferred stock, 8 percent, par $18 per share, 6,710 shares outstanding.

Retained earnings, $228,000.

On January 1, 2019, the board of directors was considering the distribution of a $62,800 cash dividend. No dividends were paid during 2017 and 2018.

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:

1. The preferred stock is noncumulative.
2. The preferred stock is cumulative.

2. Why were the dividends per share of common stock less for the cumulative preferred stock than the noncumulative preferred stock?
3. What factors would cause a more favorable dividend for the common stockholders?

The records of Hoffman Company reflected the following balances in the stockholders' equity accounts at December 31, 2018: Common stock, par $12 per share, 44,000 shares outstanding. Preferred stock, 8 percent, par $18 per share, 6,710 shares outstanding. Retained earnings, $228,000. On January 1, 2019, the board of directors was considering the distribution of a $62,800 cash dividend. No dividends were paid during 2017 and 2018. 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. b. The preferred stock is cumulative. 2. Why were the dividends per share of common stock less for the cumulative preferred stock than the noncumulative preferred stock? 3. What factors would cause a more favorable dividend for the common stockholders? Req 2 Req 1A Req 1B Req 3 Determine the total and per-share amounts that would be paid to the common stockholders and to the preferred stockholders assuming the preferred stock is noncumulative. (Round "Per Share" to 2 decimal places and rest to the nearest dollar amount.) Per Share Total Paid to the Preferred Stockholders Paid to the Common Stockholders Determine the total and per-share amounts that would be paid to the common stockholders and to the preferred stockholders assuming the preferred stock is cumulative. (Do not round intermediate instructions. Round "Per Share" to 2 decimal places and rest to the nearest dollar amount.) Per Share Total Paid to the Preferred Stockholders Paid to the Common Stockholders Req 1A Req 2 Req 3 Req 1B Why were the dividends per share of common stock less for the cumulative preferred stock than the noncumulative preferred stock? OThe dividends in arrears on the preferred stock had to be fulfilled before dividends could be paid for the current year. OThe dividend rate for preferred stockholders was increased. What factors would cause a more favorable dividend for the common stockholders? (Select all that apply.) The preferred dividends were not in arrears The preferred dividends were not cumulative. The total dividend distribution was increased The preferred dividends were in arrears. The preferred dividends were cumulative 0 The total dividend distribution was decreased