Question

EXU Effed Easy Money, Inc., has the following capital $ 175.000 LO11-5, LO11-6 EXERCISE 11.6 Preferred Stock Alternatives Preferred stock-$25 par value, 10.000 shares authorized, 7.000 shares issued and outstanding ... Common stock-$10 par value, 100,000 shares authorized, 80,000 shares issued and outstanding Total paid in capital ......... 800.000 $ 975.000 550.000 ...................... $1,525.000 Retained earnings ... . Total stockholders' equity.... L01 EX stock have been the value and have bem In the current you at will be paid to both umulative and by the The number of issued and outstanding shares of both preferred and common stock same for the last two years. Dividends on preferred stock are 8 percent of par value paid each year the stock was outstanding except for the immediate past year. In the management declares a total dividend of $60,000. Indicate the amount that will preferred and common stockholders assuming (a) the preferred stock is not cumulative preferred stock is cumulative. Machine Co. are described as follows.

Answer 1

-Cumulative preferred stuck means the dividend will get accumulated if it is not paid in any year. last year dividend is not paid therefor it will be paid in current your including last year's dividend. Dividend declared in current year is $60000. & Preferred stock is not cumulative. - Preferred stock - Dividend = 175000 x 8% _$100001 for common stock - Dividend - - = (60000 - 14000) $46000 6 Preferred stock is cumulative. Preferred stovce dividend : 175000 x 8%. - $14000 Adel last years dividend $14000 28000 common stock - Dividend = $60000 – $28000 [$ 32000