E11-10 (Algo) Computing Dividends on Preferred Stock and Analyzing Differences [LO 11-3, LO 11-4]

The records of Uluru Charters reflected the following balances in the stockholders equity accounts at December 31, 2021:

Common stock, par $12 per share, 43,500 shares outstanding. Preferred stock, 8 percent, par $17.00 per share, 6,610 shares outstanding. Retained earnings, $227,000.

On January 1, 2022, the board of directors was considering the distribution of a $62,700 cash dividend. No dividends were paid during 2020 and 2021.

Required:

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

1. The preferred stock is noncumulative.
2. The preferred stock is cumulative.

2. Why might the dividends per share of common stock be different for noncumulative preferred stock and cumulative preferred stock?

(format for 1a and 1b)

	total	per share
paid to the preferred stockholders
paid to the common stockholders

3. What factors would cause a more favorable dividend for the common stockholders? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

check all that apply