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.

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?

Sale on SolutionInn
  • CreatedOctober 12, 2013
  • Files Included
Post your question