Question

Font Paragraph Styles A corporation was organized on January 1 and issued the following shares of stock: 1) 1,500 shares of $100 par value, 10% non-participating preferred stock. 2) 15,000 shares of $20 par value common stock All shares were issued and outstanding throughout the next three years. The corporation declared and paid a cash dividend in each of those years as follows: Year 1 - $10,000 Year 2 - $36,000 Year 3 - $60,000 Required: 1) Calculate the dividends paid to each class of stock in each of those years assuming the preferred stock is NON-CUMULATIVE. Use the matrix format listed below. Be sure to show your supporting calculations and label them to indicate which numbers in the matrix they are supporting Total dividend declared $10,000 $36,000 Preferred dividends paid this year Preferred dividends carried forward to next year Common dividends paid this year Year 2 $60,000

Answer 1

preference dividend to be paid = (1500 shares x 1008 ) x 10% = $15000 . (a-b) Common dividend pand total dividend - declared $ 10000 Pref div. Carried toward to next year. Year ( preference dividend paid $10,000 - $ 21,000 $15000 $36000 ro $45000 $15000 $ 60ooo W Note : As it is said that pref. stack should be assured to be non- Cumulative, then if the p-clividade not paid in the current year they can't be carried forward to the next year. That option would be available and paid in the next year, if they all cumulative preference stocks Thanks