k Assume also that Ziegler has cumulative preferred stock dividends for the curr
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k Assume also that Ziegler has cumulative preferred stock dividends for the currenty $30,000 that were declared and paid. Compute the earnings per share of common s tor 2goration are presented in BE14-10. Compute eamix with cumulativ tock. stock DO IT! Exercises DO IT! 14-1 Herr Corporation has 3,000 shares of 7%, $100 par value preferred stock out- standing at December 31, 2017. At December 31, 2017, the company declared a s105,000 cash dividend. Determine the dividend paid to preferred stockholders and common stock holders under each of the following scenarios. Deten to preferre ine - stockhol (LO 1) 1. T he preferred stock is noncumulative, and the company has not missed any dividends in previous years of the two previous years. the two previous years 2. The preferred stock is noncumulative, and the company did not pay a dividend in each 3. The preferred stock is cumulative, and the company did not pay a dividend in a DO IT! 14-2 Jurgens Company has had 4 years of net income. Due to this succ per share to $46. During this period, paid-in capital remained the same at $2,800,00 De f its 400,000 shares of $3 par value common stock has increased fron: S12 erng di l n for-1 stock split. He asks you to show the before ttockholders' equity an tained earnings increased from $1,800,000 to $12,000,000. President E. Rife is consiExplanation / Answer
In case of common preferred stock holders, they are given preference over other stock holders. In this case , company has7%, 3000shares of preferred stock outstanding at $ 100par value. Thus, dividend payable to preferred stock is (3000×100×7%) = 21000$ and rest $ 84000 ($105,000 - 21,000) will be paid to common stock
A) As preferred stock is non cumulative and company has not missed any dividend , thus dividend of $21,000 will be paid to preferred stock and rest $84,000 will be paid to common stock
2) In this case also, as company has declared dividend thus $21,000 will be paid to preferred stock and $84,000 will be paid to other
3) As preferred stock is cumulative and company has not paid dividend in last two years , hence 63,000 (21,000*3) will be paid to preferred stock and rest 42,000 will be paid to common stock
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