Palmer Corporation issued and has outstanding 20,000 shares of $10 par-value com

Question

Palmer Corporation issued and has outstanding 20,000 shares of $10 par-value common stock and 1,000 shares of $60 par-value 20 percent preferred stock. The board of directors votes to distribute $2,000 as dividends in 2010, $3,000 in 2011, and $53,000 in 2012.

INSTRUCTIONS
Compute the total dividend and the dividend for each share paid to preferred stockholders and common stockholders each year under the following assumed situations.

Case A: The preferred stock is nonparticipating and noncumulative.
Case B: The preferred stock is cumulative and nonparticipating.

Explanation / Answer

for Case 1, Common Stock 2010 = Nil 2011 = Nil 2012 = 41000 total =41000 Preferred Stock 2010 = 2000 2011 = 3000 2012 = 12000 total = 17000 for Case 2, Preferred Stock 2010 = 2000 2011 = 3000 2012 = 31000 total =36000 Common Stock 2010 = Nil 2011 = Nil 2012 = 22000 total =22000

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