Bonita Company’s ledger shows the following balances on December 31, 2020.

7% Preferred Stock—$10 par value, outstanding 21800 shares		$ 218000
Common Stock—$100 par value, outstanding 32300 shares		3230000
Retained Earnings		572000

Assuming that the directors decide to declare total dividends in the amount of $346000, determine how much each class of stock should receive under each of the conditions stated below. One year‘s dividends are in arrears on the preferred stock.

(a) The preferred stock is cumulative and fully participating.

Preferred		Common
$		$

(b) The preferred stock is noncumulative and nonparticipating.

Preferred		Common
$		$

(c) The preferred stock is noncumulative and is participating in distributions in excess of a 10% dividend rate on the common stock.

Preferred		Common
$		$

Answer rating: 100% (QA)

a In case of cumulative preferred stock any dividend in arrear is paid in preference to current year ... View the full answer