I need help ASAP. MY HOMEWORK IS DUE IN A FEW HOURS. THANK YOU FOR THE SUPPORT.
ID: 2541661 • Letter: I
Question
I need help ASAP. MY HOMEWORK IS DUE IN A FEW HOURS. THANK YOU FOR THE SUPPORT.
Exercise 15-21 The outstanding capital stock of Concord Corporation consists of 2,200 shares of S 100 par value, 7% preferred, and 4.900 shares of S50 par value common Assuming that the company has retained earnings of $88,000, all of which is to be paid out in dividends, and that preferred dividends were not paid during the 2 years preceding the current year, state how much each class of stock should receive under each of the following conditions. (a) The preferred stock is noncumulative and nonparticipating. (Round answers to O decimal places, e.g. $38,487.) 14 Preferred Common (b) The preferred stock is cumulative and nonparticipating. (Round answers to 0 decimal places, e.g. $38,487.) Preferred Common (c) The preferred stock is cumulative and participating. (Round the rate of participation to 4 decimal places, e.g. 1.427890. Round answers to 0 decimal places, eg. $38,487.) Preferred CommonExplanation / Answer
(a)
Dividend payable to preferred stock = 2,200 * 100 * 7% = 15,400
Balance dividend paid to common stock = 88,000 - 15,400 = 72,600
(b)
Dividend in arrears for cumulative preferred stock for 2 years = 2,200 * 100 * 7% * 2 = 30,800
Dividend payable to preferred stock for the current year = 2,200 * 100 * 7% = 15,400
Total dividend payable to preferred stock = 30,800 + 15,400 = 46,200
Balance dividend paid to common stock = 88,000 - 46,200 = 41,800
(c)
Dividend in arrears for cumulative preferred stock for 2 years = 2,200 * 100 * 7% * 2 = 30,800
Dividend payable to preferred stock holders for the current year = 2,200 * 100 * 7% = 15,400
Dividend payable to preferred stock = 30,800 + 15,400 = 46,200
Dividend payable to common stock = 4,900 * 50 * 7% = 17,150
Balance dividend = 88,000 - 46,200 - 17,150 = 24,650
Preferred stock + Common stock = 220,000 + 245,000 = 465,000
Proportion of dividend to preferred stock = 24,650 * 220,000 / 465,000 = 11,662
Proportion of dividend to common stock = 24,650 * 245,000 / 465,000 = 12,988
Total dividend to preferred stock = 11,662 + 46,200 = 57,862
Total dividend to common stock = 17,150 + 12,988 = 30,138.
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