Toggle\'s Fishing Fleet had 20,000 shares of 5%, $20 par value preferred stock a

Question

Toggle's Fishing Fleet had 20,000 shares of 5%, $20 par value preferred stock and 15,000 shares of $25 par value common stock outstanding throughout 2012. These data apply to each of the independent solutions below. 1.) Assuming that total dividends declared in 2012 were $35,000 and that the preferred stock is not cumulative, common stockholders should recieve total 2012 dividends of? 2.) Assuming that the total dividends declared in 2012 were $92,000 and that the preferred stock is cumulative with two years' preferred dividends in arrears on December 31, 2012, the preferred stockholders shoukd recieve 2012 dividends totaling?

Explanation / Answer

No.of shares Par value per share Total Value Dividend 5% preferred stock 20000 $20 $4,00,000 $20,000 Common stock 15000 $25 $3,75,000 Situation 1 - Preferred stock is not cumulative Dividend declared in 2012 $35,000 Less : Dividend paid to preferred stock holders $20,000 Dividend received by Common stock holders $15,000 Situation 2 - Preferred stock is cumulative Dividend declared in 2012 $92,000 Less : Dividend paid to preferred stock holders - Current Year $20,000 - Last 2 years arrears $40,000 Dividend received by Common stock holders $32,000 Preferred stock holders received total dividend in 2012 of = $60000

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