E$11-10$ Computing Divldends on Preferred Stock and Analyzing Differences

LO $11-3,11-4$

The records of Hoffman Company reflected the following balnnces in the stockholders' equity accounts at December $31.2021$:

Common stock, par $$12$ per share, $40,000$ shares outstanding.

Preferred stock. $8$ percent, par $$10$ per share. $6\mathrm{.}000$ shares outstanding.

Retained earnings. $$220,000.$

On January $1,2022,$ the board of directors was considering the distribution of a $$62\mathrm{.}000$ cash dividend. No dividends were paid during $2020$ and $2021.$

Required:

$\frac{?}{\text{b}\text{a}\text{r}}($ Page $540)$

Determine the total and per$-$share amounts that would be paid to the common stockholders and to the preferred stockholders under two independent assumptions:

a$.$ The preferred stock is noncumulative.

b$.$ The preferred stock is cumulative.

Briefly explain why the dividends per share of common stock in requirements $1$ a and $10$ could be different.

What factors would cause a more favorable dividend for the common stockholders?