Water Tower Company had the following shares outstanding and Retained

Water Tower Company had the following shares outstanding and Retained Earnings at December 31, 2017:

Common shares (outstanding 30,000 shares)..............................$240,000
Preferred shares (7%; outstanding, 6,000 shares)............................60,000
Retained earnings...............................................................................280,000

On December 31, 2017, the board of directors considered the distribution of a cash dividend to the common and preferred shareholders. No dividends were declared during 2015 or 2016. Three independent cases are assumed:

Case A: The preferred shares are non-cumulative; the total amount of 2017 dividends would be $30,000.

Case B: The preferred shares are cumulative; the total amount of 2017 dividends would be $12,600. Dividends were not in arrears prior to 2015.

Case C: Same as Case B, except the amount is $66,000.


Required:

Compute the amount of 2017 dividends, in total and per share, that would be payable to each class of shareholders for each case. Show computations.

TIP: Preferred shareholders with cumulative dividends are paid dividends for any prior years (in arrears) and for the current year before common shareholders are paid.

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...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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