1. Powder Corporation declared, but had not yet paid, dividends on the 10,000 sh
ID: 2445955 • Letter: 1
Question
1. Powder Corporation declared, but had not yet paid, dividends on the 10,000 shares of 6%, $10 par value cumulative preferred stock it had outstanding for the year. The weighted average number of common shares outstanding and net income for the year were 50,000 shares and $90,000, respectively. Earnings per share equals:
2. Oceanview Wholesale Merchandise had 20,000 shares of 6%, $20 par value preferred stock and 15,000 shares of $25 par value common stock outstanding throughout 2014. Assuming that total dividends declared in 2014 were $45,000, that the cumulative preferred stock was issued on January 1, 2013, and that $10,000 of preferred dividends were declared and paid in 2013, the common stockholders should receive 2014 dividends totaling:
Explanation / Answer
Amount Due for Preferred stock holder in Year 13
= 24000* -10000 ( Paid to preferred stockholders )= 14000
*24000 = 20000 shares * 6% *20 par value
Amount Due for Preferred stock holder in Year 14
= 14000 ( previous year due) + 24000 ( current year ) = 38000
Total Dividend for common shareholder in Year 2010
= 45000- 38000 (preferred dividends) = 7000
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