The outstanding capital stock of Edna Millay Corporation consists of 2,200 shares of $103 par value, 6% preferred, and 5,800 shares of $60 par value common. Assuming that the company has retained earnings of $100,000, 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.) I already have the answer for this Preferred : 13596 Common : 86404 (b) The preferred stock is cumulative and nonparticipating. (Round answers to 0 decimal places, e. g. $38,487.) (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.)

a) Preferred dividend is $13,596 and Common stock is $86,404

b) Preferred dividend is $ 40,788 and Common stock is $59,212

c) Preferred dividend is $55,904.66 and Common stock is $44,095.34

Explanation:

Preferred dividend = 2200 * 103 *.06 = $ 13,596

Preferred stock = 2200 * 103 = $ 226,600

Common stock = 5800 * 60 = $ 348,000

Distribution of current dividend and past dividend to preference shares = $40,788

Distribution of dividend to common stock = $ 348,000 *.06 = $ 20,880

Surplus profit after distribution of dividend to both shareholders

= $100,000 - $40,788 - $20,880

= $ 38,332

Preferred dividend = [38,332 * 226,600] : [ (226,600 + 348,000) ]

= [38332 * 226600] : 574600

= $15,116.66

Common stock = $38,332 - $15,116.66 = $ 23215.34

(b) Preferred dividend = $13,596 for current year + ($13,596 * 2) for past 2 years

= $13,596 + $27,192

= $ 40,788

Common stock = $100,000 - $40,788

= $59,212

(c) The preferred stock is cumulative and participating

Preferred dividend = $40,788 + $ 15,116.66

= $55,904.66

Common stock = $23,215.34 + $20,880

= $44,095.34