Question: When Higdon Corporation was organized in January 2013 it immediately

When Higdon Corporation was organized in January 2013, it immediately issued 10,000 shares of $50 par, 5 percent, cumulative preferred stock and 15,000 shares of $10 par common stock. The company’s earnings history is as follows: 2013, net loss of $18,000; 2014, net income of $50,000; 2015, net income of $90,000. The corporation did not pay a dividend in 2013.

Required
a. How much is the dividend arrearage as of January 1, 2014?
b. Assume that the board of directors declares a $65,000 cash dividend at the end of 2014 (remember that the 2013 and 2014 preferred dividends are due). How will the dividend be divided between the preferred and common stockholders?




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  • CreatedOctober 12, 2013
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