Ritz Company had the following stock outstanding and Retained Earnings at Decemb

Question

Ritz Company had the following stock outstanding and Retained Earnings at December 31, 2015:

   On December 31, 2015, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2013 or 2014.

The preferred stock is noncumulative; the total amount of 2015 dividends would be $28,000.

The preferred stock is cumulative; the total amount of 2015 dividends would be $28,000. Dividends were not in arrears prior to 2013.

Compute the amount of dividends in total payable to each class of stockholders if dividends were declared as described in each case.

Compute the amount of dividends per share payable to each class of stockholders if dividends were declared as described in each case. (Round your answers to 2 decimal places.)

Ritz Company had the following stock outstanding and Retained Earnings at December 31, 2015:

Explanation / Answer

Case A Case B Case C Preferred 16640 28000 49920 Common 11360 0 22080 Total 28000 28000 72000 Case A Computation Dividend Payable The preferred stock is noncumulative; =208000*0.08 16640 Common Stock 28000-16640 11360 Case B Computation Dividend Payable The preferred stock is cumulative; =208000*0.08*2 =33280 subject amximum of 28000 28000 Common Stock 0 Case B Computation Dividend Payable The preferred stock is cumulative; =208000*0.08*3 =49920 subject maximum of 28000 49920 Common Stock 72000-49920 22080 72000 Case A Case B Case C Preferred 0.80 1.35 2.40 Common 0.02 0.00 0.05

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