2. The Creative Interiors Corporation has 40,000 shares of par common stock shar

Question

2. The Creative Interiors Corporation has 40,000 shares of par common stock shares of $50 par, 5% preferred stock outstanding. Dividends totaling $156,000 are distributed to common and preferred shareholders combined. Compute the dividends to be distributed to preferred and common stockholders in total and per share under the following independent conditions. (Round to the nearest cent If necessary). $12 and 12,000 The preferred stock is nonparticipating and noncumulative with no dividends distributed last year The preferred stock is noncumulative and fully participating after the common shareholders have received dividends per share equal to the preferred stock. The preferred stock is cumulative and nonparticipating and no dividends were distributed last year a. b. c.

Explanation / Answer

ReqA: Preferred Dividend is 5% on $ 50 par value     $ 2.50 per share Total dividend declared 156000 Less: Preferred Dividend paid 30000 (12000 shares @2.50 per share@5%on 50) Dividend paid tocommon shareholders 126000 Number of common shares 40000 Dividend paid per common share 3.15 ReqB: Preferred Dividend is 5% on $ 50 par value     $ 2.50 per share Total dividend declared 156000 Less: Preferred Dividend paid 30000 (12000 shares @2.50 per share@5%on 50) Less: Dividend paid to common shareholders 100,000 (@ $ 2.50 per share for 40,000 shares) Remaining dividend 26,000 To be distrbuted among both shareholders 52000 (total share =12000+40000) Dividend per share will be: 0.5 Therefore Preferred dividend paid (2.50+0.50) $3.00 per share with the total amount (12000*3) = $36,000 Common Dividend paid (2.50+0.50) $ 3.00 per share with the total amount (40000*3)= $ 100,000 ReqC: Preferred Dividend is 5% on $ 50 par value     $ 2.50 per share Total dividend declared 156000 Less: Preferred Dividend paid for two years 60000 (12000 shares @2.50 per sharefor two yrs @5%on 50) Remaining dividend available to Common Shareholders 96000 Number of common shares 40000 Dividend per common shares 2.4

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.