Everett Company has outstanding 30,000 shares of $50 par value, 6% preferred sto

Question

Everett Company has outstanding 30,000 shares of $50 par value, 6% preferred stock and 70,000 shares of $1 par value common stock. During its first three years in business, it declared and paid no cash dividends in the first year, $310,000 in the second year, and $90,000 in the third year.

(a) If the preferred stock is cumulative, determine the total amount of cash dividends paid to each class of stock in each of the three years.

(b) If the preferred stock is noncumulative, determine the total amount of cash dividends paid to each class of stock in each of the three years.

Distibution to Preferred Common Year 1 $Answer $Answer Year 2 $Answer $Answer Year 3 $Answer $Answer

Explanation / Answer

(a) If the preferred stock is cumulative, determine the total amount of cash dividends paid to each class of stock in each of the three years.

(b) If the preferred stock is noncumulative, determine the total amount of cash dividends paid to each class of stock in each of the three years.

Preferred Common Year 1 0 0 Year 2 (30000*50*6%*2)=180000 130000 Year 3 (30000*50*6%) = 90000 0

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