Chicago Company reported the following information at the end of this year:

Common Stock ($5 par value; 47,000 shares outstanding)	ps	235.000
Preferred Stock, 10% ($12 par value; 9,600 shares outstanding)		115,200
Retained earnings		289,000

The board of directors is considering the distribution of a cash dividend to the two groups of shareholders. No dividends were declared during the previous two years. Suppose the following three cases are independent of each other.

Case A : The preferred stock is not cumulative; the total amount of all dividends is $39,000.

Case B : Preference shares are cumulative; the total amount of all dividends is $34,560.

Case C : Preference shares are cumulative; the total amount of all dividends is $91,600.

Required:

1. Calculate the amount of dividends, in total and per share, that would be payable to each class of shareholders for each case. (Round "Dividends per share" to 2 decimal places.)

 2 Suppose the Chicago Company issued a common stock dividend of 30 percent on the shares outstanding when the market value per share was $24. Complete the table below to show how this stock dividend would compare to Case C. 

	DOLLAR AMOUNT INCREASE (DECREASE)
Article	Cash dividend—Case C		stock dividend
Assets
Passive
stockholders' equity

Answer rating: 100% (QA)

Solution We need to calculate the dividends Case A Preferred Stock Dividend 115200 10 11520 Common S... View the full answer