please include step by step process in how to solve 44. Dividends on preferred s
ID: 2408473 • Letter: P
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please include step by step process in how to solve
44. Dividends on preferred stock. In each of the following independent cases, it is assumed that the corporation has $600,000 of6% preferred stock and $2.400,000 of cornmon stock outstanding, each having a par value of $10, No dividends have been declared for 2011 and 2012. As of 1231/13, it is desired to distribute $250,000 in dividends. How much will the preferred stockholders receive if their stock is curnulative and nonparticipating? (a) (b) As of 1231/13, it is desired to distribute $600,000 in dividends. How much will the preferred stockholders receive ?ftheir stock is cumulative and participating up to 1 1% in total? (c) On 1231/13, the preferred stockholders received a $180,000 dividend on their stock which is cumulative and fully participaing, How much moncy was distributed in total for dividends during 2013?Explanation / Answer
a Dividend for 2011 600000*6% 36,000.00 Dividend for 2012 600000*6% 36,000.00 Dividend for 2013 600000*6% 36,000.00 Total preference Dividend 108,000.00 b Amount Dividend to be Distributed 600,000.00 Normal Preference Dividend(600000*6%*3) (108,000.00) Balance Available 492,000.00 Normal Equity Dividend(108000/60000*240000) (432,000.00) Total Additional to be distributed 60,000.00 Additional Distribution to Preference(60000*11%) 6,600.00 Total Preference Dividend(108000+6600) 114,600.00 c Total Prefered stcokholders Dividend 180,000.00 Normal Preference Dividend(600000*6%*3) (108,000.00) Additional Distribution to Preference 72,000.00 Additional Distribution to Preference per Share(72000/60000) 1.20 Normal Common Stock Dividend(108000/60000*240000) 432,000.00 Additional Common Stock Dividend(1.20*240000) 288,000.00 Total Dividend(180000+288000+432000) 900,000.00
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