The outstanding capital stock of Robbins Corporation consisted of 3,000 shares o

Question

The outstanding capital stock of Robbins Corporation consisted of 3,000 shares of 10% preferred stock, $250 par value and 30,000 shares of no par common stock with a stated value of $250. The preferred was issued at $412, the common at $480 per share. On January 1,2007, the retained earnings of the company were $250,000. During the succeeding five years, net income was as follows: 2007 2008 2009 2010 2011 767 500 10 000 8000 6o 0co 662.500 No dividends were in arrears as of January 1,2007, and during the five years 2007-2011, the board of directors declared dividends in each year equal to net income of the year

Explanation / Answer

a) Cumulative Statementshowing Computations Paticulars 2007 2008 2009 2010 2011 Total Dividend Paid         767,500.00         510,000.00            48,000.00           160,000.00         662,500.00 Preference Dividend to be paid = 3000*10%*250            75,000.00            75,000.00            75,000.00              75,000.00            75,000.00 Preference Dividend Paid = Existing + arrears            75,000.00            75,000.00            48,000.00           102,000.00            75,000.00 Dividend available for common stock         692,500.00         435,000.00                           -                58,000.00         587,500.00 Arrears of preference Dividend                           -              27,000.00 b) Non Cumulative Paticulars 2007 2008 2009 2010 2011 Total Dividend Paid         767,500.00         510,000.00            48,000.00           160,000.00         662,500.00 Preference Dividend to be paid = 3000*10%*250            75,000.00            75,000.00            75,000.00              75,000.00            75,000.00 Preference Dividend Paid = Existing + arrears            75,000.00            75,000.00            48,000.00              75,000.00            75,000.00 Dividend available for common stock         692,500.00         435,000.00                           -                85,000.00         587,500.00

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