Chicago Company had the following stock outstanding and retained earnings at December 31, 2011: Common stock (par
Question:
Chicago Company had the following stock outstanding and retained earnings at December 31, 2011:
Common stock (par $8; outstanding, 35,000 shares) $280,000
Preferred stock, 10% (par $15; outstanding, 8,000 shares) 120,000
Retained earnings 281,000
The board of directors is considering the distribution of a cash dividend to the two groups of stockholders. No dividends were declared during the previous two years. Three independent cases are assumed:
Case A: The preferred stock is noncumulative; the total amount of dividends is $31,000.
Case B: The preferred stock is cumulative; the total amount of dividends is $25,000.
Case C: Same as Case B, except the amount is $67,000.
Required:
1. Compute the amount of dividends, in total and per share, that would be payable to each class of stockholders for each case. Show computations.
2. Assume the company issued a 30 percent common stock dividend on the outstanding shares when the market value per share was $24. Complete the following comparative schedule including explanation of the comparativedifferences.
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Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Step by Step Answer:
Req 1 Case A x Preferred is noncumulative total amount to distribute 31000 Preferred 8000 shares Com...View the full answer
