Chapter 15 Stockholder\'s Equity (Intermediate Accounting, Kieso) Rensing, Inc.,

Question

Chapter 15 Stockholder's Equity (Intermediate Accounting, Kieso)

Rensing, Inc., has $800,000 of 4% preferred stock and $1,200,000 of common stock outstanding, each having a par value of $10 per share. No dividends have been paid or declared during 2016 and 2017. As of December 31, 2018, it is desired to distribute $270,000 in dividends.

How much will the preferred and common stockholders receive under each of the following assumptions:

(a) The preferred is noncumulative and nonparticipating.

(b) The preferred is cumulative and nonparticipating.

Explanation / Answer

(a) The preferred is noncumulative and nonparticipating.

(b) The preferred is cumulative and nonparticipating.

"It would be appreciated if you give your feedback."

Preferred Common Total Current Year Dividend (4% of $800,000) $32,000 $32,000 Remainder to Common Stock $238,000 $238,000 $32,000 $238,000 $270,000

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