The notes that accompany the financial statements indicate that Jackson has not

Question

The notes that accompany the financial statements indicate that Jackson has not paid dividends for the two years prior to 2014. On July 1, 2014, Jackson declares a dividend of $100,000 to be paid to preferred and common stockholders on August 1.

Required:

Determine the amounts of the dividends to be allocated to preferred and common stockholders assuming that the preferred stock is noncumulative, nonparticipating stock.

$

Determine the amounts of the dividends to be allocated to preferred and common stockholders assuming instead that the preferred stock is cumulative, nonparticipating stock.

$

Explanation / Answer

preferred stock is noncumulative, nonparticipating stock. Statement showing computations Particulars Amount Total Dividend      100,000.00 Preference Dividend for current year=100*8%*2000         16,000.00 Dividend for common stock =100,000-16,000         84,000.00 preferred stock is cumulative, nonparticipating stock Statement showing computations Particulars Amount Total Dividend      100,000.00 Preference Dividend for current year=100*8%*2000         16,000.00 Preference Dividend for prior 2 year=100*8%*2000*2         32,000.00 Dividend for common stock =100,000-16,000-32,000         52,000.00

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