Question

The shareholders' equity of Kramer Industries includes the data shown below. During 2019, cash dividends of $250 million were declared. Dividends were not declared in 2017 or 2018. Common stock Paid-in capital-excess of par, common Preferred stock, 8%, nonparticipating Paid-in capital-excess of par, preferred ($ in millions) $ 4ee 1,200 200 480 Required: Determine the amount of dividends payable to preferred shareholders and to commorareholders under each of the following two assumptions regarding the characteristics of the preferred stock (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Assumption A - The preferred stock is noncumulative. Assumption B - The preferred stock is cumulative. (5 in millions) Preferred Common Assumption A Assumption B

Answer 1

Mcaue o Paucned divderd case mon cummulatue dividend ony dividend tor the curent year will be paid and not bor preveou yeau n case of cummulahve dindend du the pr arrear o dividend will be paid Peeterred dividend $300 miluions x 87 $16 miluons peryear 17 ASSumphon-A Preterred Stoct is non- cummulatve frekred Stock commen Stock to be pividend faid $234 mitlion i23y C$25D-16) $ 16 miiony 00676 ASSumphon-B Preerred stoct is Cummulatue SuNay evbo Peuhculau ye2-2 Retemred ? Stock common Stock airidend to be Paid $48 million $16x3= 49 Ts 4201 miuiony y c01 81 CF250-F48)