Question

Tower Corp. had the following stock outstanding and Retained Earnings at December 31, 2015:

Common Stock (par $8; outstanding, 23,000 shares)	$	184,000
Preferred Stock, 7% (par $10; outstanding, 5,300 shares)		53,000
Retained Earnings		273,000

On December 31, 2015, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2013 or 2014, and none have been declared yet in 2015. Three independent cases are assumed:

Case A:	The preferred stock is noncumulative; the total amount of 2015 dividends would be $11,900.
Case B:	The preferred stock is cumulative; the total amount of 2015 dividends would be $11,130. Dividends were not in arrears prior to 2013.
Case C:	Same as Case B, except the total dividends are $59,000. Tower Corp. had the following stock outstanding and Retained Earnings at December 31, 2015: Common Stock (par $8; outstanding, 23,000 shares) Preferred Stock, 7% (par $10; outstanding, 5,300 shares) Retained Earnings $184,000 53,000 273,000 On December 31, 2015, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2013 or 2014, and none have been declared yet in 2015. Three independent cases are assumed: Case A: Case B: The preferred stock is noncumulative; the total amount of 2015 dividends would be $11,900. The preferred stock is cumulative; the total amount of 2015 dividends would be $11,130 Dividends were not in arrears prior to 2013. Case C: Same as Case B, except the total dividends are $59,000. Required: 1-a. Compute the amount of 2015 dividends, in total that would be payable to each class of stockholders if dividends were declared as described in each case. TIP: Preferred stockholders with cumulative dividends are to be paid dividends for any prior years (in arrears) and for the current year before common stockholders are paid Case A Case B Case C Preferred Commorn Total

Answer 1