CALCULATOR FULL SCREEN PRINTER VERSION BACK NE Question 29 wildhorse Corp. had $
ID: 2337610 • Letter: C
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CALCULATOR FULL SCREEN PRINTER VERSION BACK NE Question 29 wildhorse Corp. had $100,000 of 7%, $20 par value preferred stock and 12,000 shares of $25 par value common stock outstanding throughout 2017. I Your answer is incorrect. Try again. Assuming that total dividends declared in 2017 were $64,000, and that the preferred stock is not cumulative but is fully participating, common stockholders should receive 2017 dividends of what amount? Common stockholders should receive 57000 INK TO TEX ® Your answer is incorrect. Try again. Assuming that total dividends declared in 2017 were $64,000, and that the preferred stock is fully participating and cumulative with preferred dividends in arrears for 2016, preferred stockholders should receive 2017 dividends totaling what amount? Preferred stockholders should receive 400 LINK 10 TEXTExplanation / Answer
Q. 1)
Since P/S is non-cumulative, no previous arrear dividends should be considered for them. Since P/S is fully participating, common shareholders would get dividends based on the P/S rate.
P/S should receive (before participation) = Preferred stock amount × 7% rate
= $100,000 × 7%
= $7,000
C/S should receive (before participation) = Common shares × Par value × Preferred dividend rate
= 12,000 × $25 × 7%
= $21,000
Additional amount for participation = Total dividends – (P/S dividend + C/S dividend)
= 64,000 – (7,000 + 21,000)
= $36,000
Participation total = Preferred stock + Common stock
= $100,000 + (12,000 × $25)
= $100,000 + $300,000
= $400,000
C/S should receive after participation = ($36,000 / $400,000) × $300,000
= $27,000
C/S should receive = Before participation amount + After participation amount
= 21,000 + 27,000
= $48,000 (Answer)
Q. 2)
Here, arrears preferred dividend should also be considered for 1 year.
P/S should receive (arrears) = Preferred stock amount × 7% rate
= $100,000 × 7%
= $7,000
P/S should receive (before participation) = Preferred stock amount × 7% rate
= $100,000 × 7%
= $7,000
C/S should receive (before participation) = Common shares × Par value × Preferred dividend rate
= 12,000 × $25 × 7%
= $21,000
Additional amount for participation = Total dividends – (P/S dividend + C/S dividend)
= 64,000 – (7,000 + 7,000 + 21,000)
= $29,000
Participation total = Preferred stock + Common stock
= $100,000 + (12,000 × $25)
= $100,000 + $300,000
= $400,000
P/S should receive after participation = ($29,000 / $400,000) × $100,000
= $7,250
P/S should receive = Arrears + Before participation amount + After participation amount
= 7,000 + 7,000 + 7,250
= $21,250 (Answer)
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