Question

The Stockholders' Equity category of Rausch Company's balance sheet as of December 31, 2017, appeared as follows:

Preferred stock, $100 par, 8%, 2,000 shares
issued and outstanding	$200,000
Common stock, $10 par, 40,000 shares
issued and outstanding	400,000
Additional paid-in capital	500,000
Total contributed capital	$1,100,000
Retained earnings	900,000
Total stockholders' equity	$2,000,000

The notes to the financial statements indicate that dividends were not declared or paid for 2015 or 2016. Rausch wants to declare a dividend of $118,000 for 2017.

Required:

Determine the total and the per-share amounts that should be declared to the preferred and common stockholders under the following assumptions:

1. The preferred stock is noncumulative, nonparticipating.
2. The preferred stock is cumulative, nonparticipating.

Round per share amounts to the nearest cent.

	Total Preferred Dividends	Per Share Amount	Total Common Dividends	Per Share Amount
1.	$	$	$	$
2.	$

Answer 1

Dividend distribution

	Total preferred dividend	Per share amount	Total Common dividend	Per share amount
1.	200000*8% = 16000	16000/2000 = 8	118000-16000 = 102000	102000/40000 = 2.55
2.	16000*3 = 48000	48000/2000 = 24	118000-48000 = 70000	70000/40000 = 1.75