Monie Love Inc. began operations in January 2 0 2 0 and had the following reported net
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Question:
Monie Love Inc. began operations in January and had the following reported net income or loss for each of its years of operations:
$ loss
$ loss
$ loss
$ income
$ income
At December Monie Love capital accounts were as follows:
Common stock, par value $ per share; authorized shares
issued and outstanding shares $ fully participating and cumulative preferred stock, par value $ per share; authorized, issued and outstanding shares $ Monie Love has never paid a cash or stock dividend. There has been no change in the capital accounts since Monie Love began operations.
Required:
Assume Monnie Love Inc. decides to pay its entire retained earnings balance in a cash dividend. Prepare computations showing the amount that will be paid to the preferred and common shareholders.
For credit:
show detailed computations
cash dividend to preferred stock, $
cash dividend to common stock, $
Steps:
Give preferred stock its arrearage years arrearage
Give preferred stock its amount
Give common stock its matching amount
Divide the remainder to preferred and common using the ratio of the par values of the two stocks
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