Jane Kathryn has 30,000 shares outstanding of $10 par value, 10% preferred stock and 100,000 shares outstanding $5 par value common stock. In the first 3 years of operations, the company paid dividends in Year 1, $0; Year 2, $40,000; Year 3, $100,000. Calculate the dividend paid to preferred and common stockholders under the following independent situations:
a) Preferred is non-cumulative and nonparticipating.
b) Preferred is cumulative and nonparticipating.
c) Preferred is cumulative and participating.

Question

Jane Kathryn has 30,000 shares outstanding of $10 par value, 10% preferred stock and 100,000 shares outstanding $5 par value common stock. In the first 3 years of operations, the company paid dividends in Year 1, $0; Year 2, $40,000; Year 3, $100,000. Calculate the dividend paid to preferred and common stockholders under the following independent situations:
a) Preferred is non-cumulative and nonparticipating. 
 b) Preferred is cumulative and nonparticipating.  
c) Preferred is cumulative and participating.

Quizplus · Accepted Answer

The Answer of Jane Kathryn has 30,000 shares outstanding of $10 par value, 10% preferred stock and 100,000 shares outstanding $5 par value common stock. In the first 3 years of operations, the company paid dividends in Year 1, $0; Year 2, $40,000; Year 3, $100,000. Calculate the dividend paid to preferred and common stockholders under the following independent situations:
a) Preferred is non-cumulative and nonparticipating. 
 b) Preferred is cumulative and nonparticipating.  
c) Preferred is cumulative and participating.

Jane Kathryn Has 30,000 Shares Outstanding of $10 Par Value