Question

3/25 Payment date common stock Draends 100,ooo common stock 100,000 2 HEP Corporation has 1,000 shares of 8%, $50 par value cumulative preferred stock and 50,000 shares of $10 par value common stock outstanding. Sox.099 4/Shorex Shore x 1000 shares = 4,000 (es) Allocate the dividends for the following years: lings 2011 2012 2013 Dividends declared $3,000 $6,000 $12,000 Preferred stock 3,000 4.000 5,000 1,000 Common stock non- imuladive Extra Credit 2- 3 A 3-for-1 stock split has been declared. Make changes to the amounts below, if they do change. 300,000x2 - 100.000 100,000 shares of $6 par value common stock = $600,000

How come you put 8,000 for common stock if it's non cumulative but leave it blank if it is cumulative?

Answer 1

Cumulative preferred stock: It is a type of preferred stock, where in case fixed dividend is not paid in any earlier years, will be accumulated and can be paid in following years. All the cumulated dividend and dividend for the current period shall be paid to preferred stock holders before distributing any dividend to common stock holders. Dividend to preferred stock holders per year (1000 shares*50 Par*8% $4,000.00 if preferred stock is cumulative Dividends Declared preferred stock common stock 2011 2012 2013 $3,000.00 $6,000.00 $12,000.00 3000 (4000of current year+1000 of 2011) = 5000 4000 1000 8000 if preferred stock is non cumulative Dividends Declared preferred stock common stock 2011 $3,000.00 3000 2012 2013 $6,000.00 $12,000.00 4000 L 4000 2000 8000