Problem 5 (10 Points) The stockholders\' equity section of Giants 2015: Corporat

Question

Problem 5 (10 Points) The stockholders' equity section of Giants 2015: Corporation shows the following on December 31 Preferred stock-696, $50 par, 4,000 shares outstanding Common stock-$10 par, 30,000 shares outstanding Paid-in capital in excess of par Retained earnings Total stockholders' equity s 200,000 300,000 600,000 S1,300.000 Instructions Assuming that all of the company's retained earnings are to be paid out in dividends on 12/31/15 and that preferred dividends were last paid on 12/31/13, show how much the preferred and common stockholders should receive if the preferred stock is cumulative and non-participating

Explanation / Answer

preferred dividend 50*6%*4000 12000 Arrears in dividend    (12000*1) 12,000 dividend for current year 12,000 total dividend to preferred shareholders 24000 dividend to common shareholders (200,000-24000)= 176000

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