Tower Corp. had the following stock outstanding and Retained Earnings at December 31, 2012:

Common Stock (par $8; outstanding, 30,000 shares) .......................... $240,000

Preferred Stock, 8% (par $10; outstanding, 6,000 shares) ....................... 60,000

Retained Earnings ..................................................................... 280,000

On December 31, 2012, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2010 or 2011.

Three independent cases are assumed:

Case A: The preferred stock is noncumulative; the total amount of 2012 dividends would be $12,600.

Case B: The preferred stock is cumulative; the total amount of 2012 dividends would be $14,400. Dividends were not in arrears prior to 2010.

Case C: Same as Case B, except the total dividends are $66,000.

Required:

1. Compute the amount of 2012 dividends, in total and per share, that would be payable to each class of stockholders for each case. Show computations.

2. Complete the following schedule, which compares case C to a 100 percent common stock dividend issued when the stock price is $24.

Amount of Dollar Increase (Decrease)

Item ___________Case C (Cash Dividend) ______________Stock Dividend

Assets .................................... $ .................................... $

Liabilities ................................. $ .................................... $

Stockholders' Equity..................... $ .................................... $