Question

Since it was organized in January 2015, HobKnob Production Corporation has had 1500 shares of $100 par value, 10% preferred stock and 15,000 shares of $20 par value common stock. It has declared and paid dividends each year as shown below. Show the distribution of total dividends to each class of stockholder under each of the following assumptions: For year 2018, fill-in-the-blank for the amount of S's the Non-Cumulative Preferred Dividend is in year 2018 Dividends Year Assume Preferred Stock is Non Cumulative Assume Preferred Stock is Cumulative Declared and Paid Preferred Dividend Common Dividend Preferred Dividend Common Dividend 2018 10,000 2019 55,000 2020 80,000

Answer 1

Year Dividends Assume preferred stock Assume Preferred stock is Declared and Paid is Non-Cumulative cumulative Preferred Common Preferred Common Dividend Dividend Dividend Dividend 10,000 10,000 10,000 55,000 15,000 40,000 20,000 35,000 80,000 15,000 65,000 15,000 65,000 2018 2019 2020

Workings Preferred Stock is Non Cumulative Dividend Payable Dividend declared Dividend paid Balance after paying to Preferred stock 15,000 10,000 10,000 2018 Preferred stock (1500 shares*$100*10%) Common stock 2019 Preferred stock (1500 shares*$100*10%) Common stock 2020 Preferred stock (1500 shares*$100*10%) Common stock 15,000 40,000 55,000 15,000 40,000 15,000 65,000 80,000 15,000 65,000 Preferred Stock is Cumulative Dividend Payable Dividend declared Beginning Accumulated dividend Dividend paid Ending Accumulated dividend 5,000 Balance after paying to Preferred stock 15,000 10,000 10,000 2018 Preferred stock (1500 shares*$100*10%) Common stock 2019 Preferred stock (1500 shares*$100*10%) Common stock 2020 Preferred stock (1500 shares*$100*10%) Common stock 15,000 5000 35,000 55,000 20,000 35,000 15,000 0 65,000 80,000 15,000 65,000