Holders. of receive acceding the stated rate under certain conditions, Holders,

Question

Holders. of receive acceding the stated rate under certain conditions,  Holders, of the stock are not entitled to tied receive dividends in excess of the stated rate.  Holders of this stock can exchange it for shares of common stock.  Holders of the stock lose any div addends that arc not declared in the current year. York's outstanding stock consists of 80,000 shares of noncomulativeve 7.5% preferred stock with a $s par Exercise 11-8 and also 200.000 shares of common stock with a $1 par value. During its first four years of opera- Dividends on common the corporation declared and paid the following total cash dividends:  Determine the amount of divides paid each year to each of the two classes of stockholders: preferred and common. Also compute the dividends paid to each class for the four years combined.  On October 10. the stockholders' equity of Sherman Systems appears as follows;

Explanation / Answer

11-8

Assuming Prferred Stock to be Non-Cummulative

Dividend payable to preferred Stock if there are profits(80,000*5*7.5%) = $30,000

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11-9

Assuming Prferred Stock to be Cummulative

Dividend payable to preferred Stock if there are profits(80,000*5*7.5%) = $30,000

Particulars 2015 2016 2017 2018 total Cash Dividend paid 20,000 28,000 200,000 350,000 Dividend paid to Preferred Stock 20,000 28,000 30,000 30,000 108,000 Unpaid Dividend CArried Forward NIL NIL NIL NIL Dividend Paid to Common Stock NIL NIL 170,000 320,000 490,000

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