The board of directors of Lincoln Corp. wishes to declare a $125,000 cash dividend to be divided
Question:
The board of directors of Lincoln Corp. wishes to declare a $125,000 cash dividend to be divided between the preferred and common shareholders. The equity accounts prior to the dividend are the following:
8% Preferred Stock ($50 par) $ 250,000
Additional Paid in Capital 50,000
Common Stock ($10 par) 350,000
Additional Paid in Capital 250,000
Retained Earnings 500,000
Total $1,400,000
Required: How much of the $125,000 would be allocated to each class of stock under each of the following cases if no dividends have been paid in the prior three years:
A.) The preferred stock is cumulative and non-participating.
B.) The preferred stock is non-cumulative and partially participating up to 16%.
C.) The preferred stock is cumulative and fully participating
Fundamental Accounting Principles Volume II
ISBN: 978-1259066511
14th Canadian Edition
Authors: Larson Kermit, Jensen Tilly