Question

Ritz Company had the following stock outstanding and Retained Earnings at December 31, 2015:
Common stock (par $ 1; outstanding, 500,000 shares)………………. $ 500,000
Preferred stock, 8% (par $ 10; outstanding, 21,000 shares)…………… 210,000
Retained earnings……………………………………………………… 900,000
On December 31, 2015, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2013 or 2014. Three independent cases are assumed:
Case A: The preferred stock is noncumulative; the total amount of 2015 dividends would be $ 30,000.
Case B: The preferred stock is cumulative; the total amount of 2015 dividends would be $ 30,000. Dividends were not in arrears prior to 2013.
Case C: Same as Case B, except the amount is $ 75,000.
Required:
Compute the amount of dividends, in total and per share, payable to each class of stockholders if dividends were declared as described in each case. Show computations. Round per-share amounts to two decimal places.


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  • CreatedNovember 02, 2015
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