Question

Hunchback Company had stock outstanding as follows during each of its first! four years of operations: 3,000 shares of 5%, $10 par, cumulative preferred stock and 100,000 shares of common stock. Determine the total dividends for each class of stock for each year by completing the schedule. Also compute the total paid for the four years. Total dividends paid were as follows: 2013: $1,000; 2014: $0; 2015: $3,000; 2016: $50,000. Show all of your work. page 15: assume that the preferred stock is non-cumulative page 16: assume that the preferred stock is cumulative

Answer 1

Ans Hunch Pack Company Precede Clocko is non cumulative (Woreking Note 1) Year 2014 20131 Doo Preferred $1,000 Common $0 / Total $lno 2014 in ob & onero 2 san 2015.. 10w $ 1.500 lisosoo $3,000 J 2016 1858 $1,500 $48,500 $50,000 Preferred Stockis. cumulative D ar (Working Note 2) year 2013 rol Preferred $1,000 Common | Total $1,000 20.14 $0 $0 $ 0 2015 RE $3,000 $0 $3,000 2016 $2,000 $48,000 $50,000

In case of cumulative preferred stock any unpaid dividends on preferred Stock are carcried forward to the future years and must be paid before any dividend is paid to common stock bolders. 02 In case of cumulative preferned Stock any unpoid dividends on prefenred stocks, are not carried forward to the day subsequent years. 7 6921 boring

Norking Notel-1 - Preferred Stock = 3,000 shares @ $10 eves $30,oo Dividend on pruegerned stock = $30,000x5%. $1,500 Commen stock loro oro sharee When Pne penned stock is non cumulative 2012 : Totas dividend paid Dividend to Preferned stock = (Current Dividend to common Stock hoiden - $1,000 $1,000 Nie 2014 Total dividend paid o nie 2015 Total dividend paid $3,000 Dividend to preferired stock holderes =$1,500 (current). Dividend to Common Stockholders : $1,500 2016 Total Dividend dividend paid = $50,000 paid to preferred stockholders & 1,500. (Cannent) to common stockholdens = $48,500 . Dividend

-Note-2 When Prefferred stock is cumulative 2012 Total Dividend dividend paid $1,00 to Preferred stock holders - Connent year - $1,000 - Diridend to common stock holders - 2014 Total dividend paid 2015 Total dividend paid = $3,000 Dividend to Prekerned stock holders: - Current year : $1,500 Arrean dividend 2013 =$ 500 Arenean dividend 2014 - $1,000 Dividend to common stock holders . O 2016 Total dividend paid Dividend to Preferhed Stock holders Current year . $1,500 Annear dividend 2014 - $ 500 - $50,00 - $2,000 Dividend to common stock holders - $48,000