a) Cash Dividends Kerry Company has 1,000 shares of $100 par value, 9% preferred
ID: 2580951 • Letter: A
Question
a)
Cash Dividends
Kerry Company has 1,000 shares of $100 par value, 9% preferred stock and 10,000 shares of $10 par value common stock outstanding. The preferred stock is cumulative and nonparticipating. Dividends were paid in 2012. Since 2012, Kerry has declared and paid dividends as follows:
Required:
1. Determine the amount of the dividends to be allocated to preferred and common stockholders for each year 2014 to 2016. If an amount is zero, enter "0".
2. If the preferred stock had been noncumulative, how much would have been allocated to the preferred and common stockholders each year?
2013 $ 0 2014 10,000 2015 20,000 2016 25,000Explanation / Answer
Dividend means a fraction of company's earnings declared by the company's board of directors and distributed to its stakeholders in the proportion of shares owned by them.
1000 shares at $100 par value so capital of 100,000 at 9% = 9,000 for preference
This applies to each year. If nothing was paid in 2013, then in 2014, 18,000 would be due and so on.
Ordinary shares get dividends which depend on profitability - no set amount each year.
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