10.00 points E11-18 Computing Dividends on Preferred Stock and Analyzing Differe
ID: 2531468 • Letter: 1
Question
10.00 points E11-18 Computing Dividends on Preferred Stock and Analyzing Differences LO11-4, 11-7, 11-8 The records of Hollywood Company reflected the following balances in the stockholders' equity accounts at the end of the current year: Common stock, $11 par value, 32,000 shares outstanding Preferred stock, 10 percent, $9 par value, 6,000 shares outstanding Retained earnings, $234,000 On September 1 of the current year, the board of directors was considering the distribution of an $82,000 cash dividend. No dividends were paid during the previous two years. You have been asked to determine dividend amounts under two independent assumptions (show computations): a. The preferred stock is noncumulative. b. The preferred stock is cumulative Required: 1. Determine the total and per share amounts that would be paid to the common stockholders and the preferred stockholders under the two independent assumptions. (Round "per share" to 2 decimal places) Preferred Common Noncumulative: Total Per share Cumulative Total Per shareExplanation / Answer
13)
Preferred
Common
Noncumulative:
Total
6000*9*10% = 5400
82000 – 5400 = 76600
Per share
5400/6000 = 0.9
76600/32000 = 2.39
Cumulative:
Total
(6000*9*10%)*(2+1) = 5400*3 = 16200
82000 – 16200 = 65800
Per share
16200/6000 = 2.7
65800/32000 = 2.05
14)
Total amount of dividend to be paid = (Total shares issued – Treasury stock)*Dividend per share
= (247000 – 73000)*0.73 = 127020
15)
Shares have been issued = Shares outstanding + Treasury stock
= 168000 + 13000 = 181000
Preferred
Common
Noncumulative:
Total
6000*9*10% = 5400
82000 – 5400 = 76600
Per share
5400/6000 = 0.9
76600/32000 = 2.39
Cumulative:
Total
(6000*9*10%)*(2+1) = 5400*3 = 16200
82000 – 16200 = 65800
Per share
16200/6000 = 2.7
65800/32000 = 2.05
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