Question

Walker, Inc., has the following capital structure:
Preferred stock— $25 par value, 10,000 shares authorized,
7,000 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . $175,000
Common stock— $10 par value, 100,000 shares authorized,
80,000 shares issued and outstanding . . . . . . . . . . . . . . . . . .. .. . . . .. . . . . . . . . . . . 800,000
Total paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . $975,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 550,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,525,000
The number of issued and outstanding shares of both preferred and common stock have been the same for the last two years. Dividends on preferred stock are 8 percent of par value and have been paid each year the stock was outstanding except for the immediate past year. In the current year, management declares a total dividend of $50,000. Indicate the amount that will be paid to both preferred and common stockholders assuming
(a) The preferred stock is not cumulative and
(b) The preferred stock is cumulative.



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  • CreatedApril 17, 2014
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