Question

The outstanding capital stock of Metlock Corporation consists of 1,900 shares of $100 par value, 8% preferred, and 4,700 shares of $50 par value common.

Assuming that the company has retained earnings of $92,000, all of which is to be paid out in dividends, and that preferred dividends were not paid during the 2 years preceding the current year, state how much each class of stock should receive under each of the following conditions.

(a) The preferred stock is noncumulative and nonparticipating. (Round answers to 0 decimal places, e.g. $38,487.)

Preferred		Common
$enter a dollar amount rounded to 0 decimal places		$enter a dollar amount rounded to 0 decimal places

(b) The preferred stock is cumulative and nonparticipating. (Round answers to 0 decimal places, e.g. $38,487.)

Preferred		Common
$enter a dollar amount rounded to 0 decimal places		$enter a dollar amount rounded to 0 decimal places

(c) The preferred stock is cumulative and participating. (Round the rate of participation to 4 decimal places, e.g.1.4278%. Round answers to 0 decimal places, e.g. $38,487.)

Preferred		Common
$enter a dollar amount rounded to 0 decimal places		$enter a dollar amount rounded to 0 decimal places

Answer 1

Answers Non-Cumulative and non Participative Cumulative and NonParticipating Cumulative and Participative Preferred 15200 45600 57939 Common 76800 46400 34061 Current Stock Out-Standing Shares Common Stokc @ 50 4700 Preferred Stock8% @ 100 1900 Compute the Annual Dividend on Preferred Stock Preferred Stock Dividend (190000*8%) Divdidend Arraers to Preferres Stock (15200*2) Amount 235000 190000 15200 30400 Non-Cumulative and non Participative Non-Cumulati Preferred Common 15200 Total 15200 ol Current Year Arrears Common Stock Total Dividend 7680076800 76800 92000 15200

Current Year Arrears Common Stock Total Dividend Cumulative and non Participative Preferred Common Total 15200 15200 30400 30400 46400 46400 45600 46400 92000 Common Cumulative and Participative Preferred Current Year 15200 Arrears 30400 Common Stock ((235000*8%) Balance Dividend Pro pata 12339 Total Dividend 57939 Total 15200 30400 18800 27600 92000 18800 15261 34061 Amount for Participation 27600 Rate of Participation = 6.4941% Working Notes 92000-15200-30400-18800 Rate of Participation 26700/(235000+190000) Particpating Dividend 190000*6.4941% 235000*6.4941% Total Participating Dividend Preferred Stock Common Stock 12339 15261 27600