Question: When Crossett Corporation was organized in January 2016 it immediately

When Crossett Corporation was organized in January 2016, it immediately issued 4,000 shares of $50 par, 6 percent, cumulative preferred stock and 50,000 shares of $20 par common stock. Its earnings history is as follows: 2016, net loss of $35,000; 2017, net income of $125,000; 2018, net income of $215,000. The corporation did not pay a dividend in 2016.
Required
a. How much is the dividend arrearage as of January 1, 2017?
b. Assume that the board of directors declares a $25,000 cash dividend at the end of 2017 (remember that the 2016 and 2017 preferred dividends are due). How will the dividend be divided between the preferred and common stockholders?

View Solution:


Sale on SolutionInn
Sales21
Views394
Comments
  • CreatedApril 20, 2015
  • Files Included
Post your question
5000