Kerry Company has 700 shares of $100 par value, 9% preferred stock and 10,500 sh
ID: 2464687 • Letter: K
Question
Kerry Company has 700 shares of $100 par value, 9% preferred stock and 10,500 shares of $10 par value common stock outstanding. The preferred stock is cumulative and nonparticipating. Dividends were paid in 2010. Since 2010, Kerry has declared and paid dividends as follows:
2011 $0
2012 $7,100
2013 $13,700
2014 $17,900
Required:
1. Determine the amount of the dividends to be allocated to preferred and common stockholders for each year 2012 to 2014. If an amount is zero, enter "0".
2012
2013
2014
2. If the preferred stock had been noncumulative, how much would have been allocated to the preferred and common stockholders each year?
2012
2013
2014
Year Preferred Dividends Common DividendsExplanation / Answer
1. In case of cummulative prefferd stock any unpaid dividend on prefferd stock are carried for future years and must be paid be before any dividend is paid to commond stock holders. Thus in the given question, since the company has not paid any dividend in the year 2011 , the preffered dividend amounting to $ 6300 will be paid in 2012 and same procedure will be applied to rest of the years.
Dividend distribution will be as follows
2. Unpaid divedend on non cumulative prefernce shares is not carried forward to future years. If no dividend is declared in any year there is no question of dividend in arrears.
Year Preferred stock Common stock Unpaid preffered dividend 2011 0 0 6300 2012 6300 + 800 = 7100 0 5500 2013 5500 + 6300 = 11800 1900 0 2014 6300 11600 0Related Questions
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