Question

Common shares (500,000 outstanding shares) Preferred shares (8 percent; 21,000 outstanding shares) Retained earnings $500,000 210,000 900,000 On December 31, 2017, the board of directors is considering the distribution of a cash dividend to the common and preferred shareholders. No dividends were declared during 2015 or 2016. Three independent cases are assumed: Case A: The preferred shares are non-cumulative; the total amount of 2017 dividends would be $30,000. Case B: The preferred shares are cumulative; the total amount of 2017 dividends would be $30,000. Dividends were not in arrears prior to 2015. Case C: Same as Case B, except the amount is $75,000. Required: 1-a. Compute the amount of dividends, in total, payable to each class of shareholders for each case. Case A Case B Case C Preferred Common Total 0 1-b. Compute the amount of dividend per share, payable to each class of shareholders for each case. (Round your answers to 2 decimal places.) Case A Case B Case C Preferred Common

Answer 1

Selutte 16800 1-a Annual prelened 201 210000 X g % Porotored dividend n Atveary der 2015 Ond 201416800X2= 33600 Total pruned dsvidend tn Case c = 168003360D 50400 case B ncluding Aneans Case c Case A Incwdsng Aeary) 50400 680D 30000 prafered 24600 3200 Lemmon 15o00 30000 300D0 Total

1- CayAA Case B Case C 143 prudovred .80 2.40 Cemmmon OS03 Total O.3 2.45 shol