The company has 10,000 shares of 6%, $100 par preferred stock outstanding. In addition, the company has

Question:

The company has 10,000 shares of 6%, $100 par preferred stock outstanding. In addition, the company has 100,000 shares of common stock outstanding. The company started business on January 1, 2010. Total cash dividends paid during 2010 and 2011 were $45,000 and $100,000, respectively. Compute the total dividends paid to preferred shareholders and to common shareholders in both years, assuming that

(1) The preferred stock is noncumulative and

(2) The preferred stock is cumulative.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...