5, Norris Corporation has outstanding 10,300 shares of $105 par value, 7% prefer

Question

5, Norris Corporation has outstanding 10,300 shares of $105 par value, 7% preferred stock and 61,700 shares of $15 par value common stock. The preferred stock was issued in January 2014 and no dividends were issued in 2014 and 2015. Norris declares a cash dividend of $324,000 in 2016. Assuming the preferred stock is noncumulative a. How much dividend will the preferred shareholders receive? b. How much dividend will the common shareholders receive? Assuming the preferred stock is cumulative a. How much dividend will the preferred shareholders receive? b. How much dividend will the common shareholders receive? Pt 1

Explanation / Answer

When the preferred stock is non cumulative, only the current year dividends are paid. When the preferred stock is cumulative, the dividends in arrears are also paid along with the current year dividends.

Preferred stock dividends payable per year= 10,300 * 105 * 7% = 75,705

(a) Preferred stock dividends = 75,705

(b) Common stock dividends = 324,000 - 75,705 = 248,295

------------------------------------------------------------

(a) Preferred stock dividends = 75,705 * 3 = 227,115

(b) Common stock dividends = 324,000 - 227,115 = 96,885

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.