Question
When Higdon Corporation was organized in January 2014, it immediately issued 5,400 shares of $52 par, 7 percent, cumulative preferred stock and 9,000 shares of
When Higdon Corporation was organized in January 2014, it immediately issued 5,400 shares of $52 par, 7 percent, cumulative preferred stock and 9,000 shares of $8 par common stock. The companys earnings history is as follows: 2014, net loss of $16,000; 2015, net income of $64,200; 2016, net income of $98,700. The corporation did not pay a dividend in 2014.
a. How much is the dividend arrearage as of January 1, 2015? (Do not round intermediate calculations.)
b. Assume that the board of directors declares a $43,200 cash dividend at the end of 2015 (remember that the 2014 and 2015 preferred dividends are due). How will the dividend be divided between the preferred and common stockholders? (Do not round intermediate calculations. Amounts to be deducted should be indicated with minus sign.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started