Walker, Inc., has the following capital structure: Preferred stock $25 par value, 10,000 shares authorized, 7,000 shares

Question:

Walker, Inc., has the following capital structure:

Preferred stock— $25 par value, 10,000 shares authorized,

7,000 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . $175,000

Common stock— $10 par value, 100,000 shares authorized,

80,000 shares issued and outstanding . . . . . . . . . . . . . . . . . .. .. . . . .. . . . . . . . . . . . 800,000

Total paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . $975,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 550,000

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,525,000

The number of issued and outstanding shares of both preferred and common stock have been the same for the last two years. Dividends on preferred stock are 8 percent of par value and have been paid each year the stock was outstanding except for the immediate past year. In the current year, management declares a total dividend of $50,000. Indicate the amount that will be paid to both preferred and common stockholders assuming

(a) The preferred stock is not cumulative and

(b) The preferred stock is cumulative.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...