Water Tower Company had the following stock outstanding and retained earnings at
ID: 2360576 • Letter: W
Question
Water Tower Company had the following stock outstanding and retained earnings at December 31, 2009:
Common stock (par $9; outstanding, 27,000 shares)
$243,000
Preferred stock, 12% (par $15; outstanding, 7,000 shares)
105,000
Retained earnings
279,000
The board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2007 or 2008. Three independent cases are assumed:
Case A: The preferred stock is noncumulative; the total amount of dividends is $29,000.
Case B: The preferred stock is cumulative; the total amount of dividends is $37,800.
Case C: Same as Case B, except the amount is $60,000.
Requirement 1:
Compute the total dividends and dividend per share, that would be payable to each class of stockholders for each case.
Case A
Preferred
Common
Total dividend
$
$
Dividend per share
$
$
Case B
Preferred
Common
Total dividend
$
$
Dividend per share
$
$
Case C
Preferred
Common
Total dividend
$
$
Dividend per share
$
$
Water Tower Company had the following stock outstanding and retained earnings at December 31, 2009:
Explanation / Answer
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