of Hoffman Company reflected the following balances in the stockholders\' equity
ID: 2409666 • Letter: O
Question
of Hoffman Company reflected the following balances in the stockholders' equity accounts at Dece 2015: Common stock, par $12 per share, 41,000 shares outstanding Preferred stock, 8 percent, par $12 per share, 6,110 shares outstanding. Retained earnings, $222,000 On January 1, 2016, the board of directors was considering the distribution of a $62,200 cash dividend. No dividends were paid during 2014 and 2015 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 a The preferred stock is noncumulative. (Round "Per Share" to 2 decimal places and rest to the nearest dollar amount.) Total Per Share Paid to the Preferred Stockholders Paid to the Common Stockholders b. The preferred stock is cumulative. (Round "Per Share" to 2 decimal places and rest to the nearest dollar amount.) Total Per Share Paid to the Preferred Stockholders Pald to the Common Stockholders Type here to searchExplanation / Answer
1) a)
Total amount paid to the preferred stockholders = 6110*12*8% = 5865.60
Per share amount paid to the preferred stockholders = 5865.60/6110 = 1.04
Total amount paid to the common stockholders = 62200 - 5865.60 = 56334.4
Per share amount paid to the common stockholders = 56334.4/41000 = 1.37
1) b)
Total amount paid to the preferred stockholders = [6110*12*8%]*[2+1]= 5865.60*3 = 17596.80
Per share amount paid to the preferred stockholders = 17596.80/6110 = 2.88
Total amount paid to the common stockholders = 62200 - 17596.80 = 44603.2
Per share amount paid to the common stockholders = 44603.2/41000 = 1.09
2)
The dividend in arrears on the preferred stock had to be fulfilled before dividends could be paid for the current year
3)
The preferred dividends were not in arrears.
The preferred dividends were not cumulative.
The total dividend distribution was increased.
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