Carlos Company had the following stock outstanding and Retained Earnings at December 31, 2013:
Common Stock (par $1; outstanding, 490,000 shares) ........................... $490,000
Preferred Stock, 8% (par $10; outstanding, 19,000 shares) ....................... 190,000
Retained Earnings ...................................................................... 966,000
On December 31, 2013, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2011 or 2012.
Three independent cases are assumed:
Case A: The preferred stock is noncumulative; the total amount of 2013 dividends would be $24,000.
Case B: The preferred stock is cumulative; the total amount of 2013 dividends would be $24,000. Dividends were not in arrears prior to 2011.
Case C: Same as Case B, except the amount is $67,000.
Required:
1. Compute the amount of 2013 dividends, in total and per share, payable to each class of stockholders for each case. Show computations. Round per-share amounts to two decimal places.
2. Complete the following schedule, which compares case C to a 100 percent stock dividend on the outstanding common shares when the stock price was $45.
. Amount of Dollar Increase (Decrease)
Item Case C (Cash Dividend) Stock Dividend
Assets .................................. $ ......................... $
Liabilities .............................. $ ......................... $
Stockholders' Equity ................ $ ......................... $