mmeducatuon.com/hm.tpx duesion value 2.00 polnts records of Hoffman Company refl

Question

mmeducatuon.com/hm.tpx duesion value 2.00 polnts records of Hoffman Company reflected the following balances in the stockholders' equity accounts at December 31, 2015: ers equity accounts at Common stock, par $12 per share, 47,000 shares outstanding Preferred stock. 8 percent. par $13.5 per share. 7.310 shares outstanding. Retained earnings, $234,000. n January 1. 2016, the board of directors was considering the distribution of a so ividends were paid during 2014 and 2015. 3.400 cash dividend. No equired: Determine the total and per-share amounts that would be paid to the common stockholders and to the preferred stockholders under two independent assumptions: a. The preferred stock is noncumulative. (Round "Per Share" to 2 decimal places and rest to the nearest dollar amount.) Total Paid to the Preferred Stockholders 7.018 S 58,382 $ 0.98 Paid to the Common Stockholders s 1.20: b. The preferred stock is cumulative. (Round "Per Share" to 2 decimal places and rest to the nearest dollar amount.) Total Per Share Paic to the Preferred Stockholders f $ Paid to the Common Stookhoiders 349.3 14.035 S 65 1.92 1.05: Why we e the o cer trgha e ofcom r on stock oncumu ativa preferred stopk? ? orme cum at preferre sto c nan the

Explanation / Answer

Case-A Preferred Share capital: $98,685 Rate of preferred dividend 8% Annual Preferred dividend 7895 Dividend per share 1.080027 Total dividend paid 63400 Less: Prefered Dividend 7895 Dividend to common Stock 55505 Number of Common Stock 47000 Dividend per common Stock 1.18 Case-B Total dividend paid 63400 Less: Arrears in Preferred 7895 Less: Prefered Dividend 7895 Dividend to common Stock 47610 Number of Common Stock 47000 Dividend per common Stock 1.01 Req A; Total Per share Paid to Prefered share 7895 1.08 Paid to Common Share 55505 1.18 Req B Total Per share Paid to Prefered share 15790 2.16 Paid to Common Share 47610 1.01 Req C: Answer is: The dividen in arears on preferred stock has to be fulfilled before dividend could be paid fr the current year. Req D: More favorable dividend for common Stckholders will be done with the following: 1. The preferred dividend ere not in arrears 2. The preferred dividend are non-cumulative 3. The total dividend distribution was increased

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