Chicago Company reported the following information at the end of the current year

Common stock ($10 par value 37,000 shares outstanding $370,000

Preferred stock. 10% (S 10 par value, 8200 shares outstanding) 82,000

Retained earnings 282,000

The board of directors is considering the distribution of a cash dividend to the two groups of stockholders No dividends were declared during the previous two years. Three independent cases are assumed

Case A The preferred stock is noncumulative, the total amount of dividends is $32.000

Case B The preferred stock is cumulative, the total amount of dividends is $24,600

Case C The pretend stock is cumulative, the total amount of all dividends is $90,200

Required:

compute the number of dividends, in total and per share, that would be payable to each class of stockholders tor each case (Round "dividends per share" to 2 decimal places.)

Question

Carlos Gregory

Business

21 January, 19:05

Chicago Company reported the following information at the end of the current year

Common stock ($10 par value 37,000 shares outstanding $370,000

Preferred stock. 10% (S 10 par value, 8200 shares outstanding) 82,000

Retained earnings 282,000

The board of directors is considering the distribution of a cash dividend to the two groups of stockholders No dividends were declared during the previous two years. Three independent cases are assumed

Case A The preferred stock is noncumulative, the total amount of dividends is $32.000

Case B The preferred stock is cumulative, the total amount of dividends is $24,600

Case C The pretend stock is cumulative, the total amount of all dividends is $90,200

Required:

compute the number of dividends, in total and per share, that would be payable to each class of stockholders tor each case (Round "dividends per share" to 2 decimal places.)

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Answers (1)

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Javier Downs · Answer 1

37,000 common stock outstanding

preferred stock dividends = $82,000 x 10% = $8,200

Case A The preferred stock is noncumulative, the total amount of dividends is $32.000

dividends distributed to preferred stockholders = $8,200 dividends distributed to common stockholders = $32,000 - $8,200 = $23,800

since the preferred stocks are non-cumulative, if dividends are not paid during a certain they are "lost" and will not be recovered.

Case B The preferred stock is cumulative, the total amount of dividends is $24,600

dividends distributed to preferred stockholders = $8,200 x 3 = $24,600 dividends distributed to common stockholders = $0

Case C The pretend stock is cumulative, the total amount of all dividends is $90,200

dividends distributed to preferred stockholders = $8,200 x 3 = $24,600 dividends distributed to common stockholders = $90,200 - $24,600 = $65,600