Yacht & Beach Company began operations on January 1, 2015, and issued preferred and common stock. The
Question:
Yacht & Beach Company began operations on January 1, 2015, and issued preferred and common stock. The stockholders' equity section of the Yacht & Beach Company's balance sheet immediately after the issuance of the preferred and common stock was as follows:
Preferred stock, No par, $4 annual dividend,
58,000 shares issued and outstanding $ 4,800,000
Common stock, $2 par,
1,100,000 shares issued and outstanding 2,200,000
Additional paid-in capital - common 21,600,000
Retained earnings 0
Total stockholders' equity $28,600,000
Dividend payments were as follows:
2015 $0
2016 $100,000
2017 $420,000
2018 $750,000
No additional shares of preferred or common stock were issued after January 1, 2015, nor did the company ever have treasury stock.
Required
How would the dividends be distributed for 2015 through 2018 between the preferred stock and the common stock if:
a. the preferred stock were cumulative?
b. the preferred stock were noncumulative?
College Accounting Chapters 1-30
ISBN: 978-0077862398
14th edition
Authors: John Price, M. David Haddock, Michael Farina