Question

Dividends for Preferred and Common Stock The Stockholders’ Equity category of Rausch Company’s balance sheet as of December 31, 2010, appeared as follows:
Preferred stock, $100 par, 8%,
2,000 shares issued and outstanding ..... $ 200,000
Common stock, $10 par,
40,000 shares issued and outstanding ..... 400,000
Additional paid-in capital ............ 500,000
Total contributed capital ..........$1,100,000
Retained earnings ...............900,000
Total stockholders’ equity ..........$2,000,000
The notes to the financial statements indicate that dividends were not declared or paid for 2008 or 2009. Rausch wants to declare a dividend of $118,000 for 2010.

Required
Determine the total and the per-share amounts that should be declared to the preferred and common stockholders under the following assumptions:
1. The preferred stock is noncumulative, nonparticipating.
2. The preferred stock is cumulative, nonparticipating.



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  • CreatedJanuary 12, 2012
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