P11-8 1-6, 11-7 Comparing Stock and Cash Dividends (AP1 1-1) Chicago of the curr
ID: 2585841 • Letter: P
Question
P11-8 1-6, 11-7 Comparing Stock and Cash Dividends (AP1 1-1) Chicago of the current year L011-4, 1 Chicago Compuny reprted the following information at the end of the curen Common stock (S8 par value; 35.000 shares outstanding) Preferred stock, 10% ($15 par value: 8.000 shares outstanding) Retained earnings $280,000 20,000 281,000 The board of directors is considering the distribution of a cash dividend ers. No dividends were declared during the previous two years. Assume the three caseu pendent of each other Case A: The preferred stock is noncumulative; the total amount of all dividends is $31.0m Case B: The preferred stock is cumulative; the total amount of all dividends is $36,000 Case C: The preferred stock is cumulative; the total amount of all dividends is $90.000 Required I. Compute the amount of dividends, in total and per share, that would be payable to stockholders for each case. Show computations. 2. Assume Chicago Company issued a 3 0 percent common stock dividend on the outstanding when the market value per share was $24. Fill in the table below to show how this stock d would compare to Case C ivie AMOUNT OF DOLLAR INCREASE (DECREASE Cash Dividend-Case C Stock Dividend Item Assets Liabilities Stockholders' equityExplanation / Answer
1 Case A The preffered Stock is Non Cumilative; the total amount of all dividends $31,000 Total Dividend 31000 Total Value of Preffred Stock 120000 Total Cash Dividend for preferred stock @10% (120000*10%) 12000 TotalCash Dividend for Common Stock (31000-12000) 19000 Cash Dividend for each preferred stock (12000/8000) 1.50 Cash Dividend for each Common Stock ( 19000/35000) 0.54 Case B The preffered Stock is Cumilative; the total amount of all dividends $36,000 Total Dividend 36000 Total Value of Preffred Stock 120000 Total CumilativeCash Dividend for preferred stock @10% (120000*10% *3) 36000 TotalCash Dividend for Common Stock (36000-36000) 0 Cash Dividend for each preferred stock (36000/8000) 4.50 Cash Dividend for each Common Stock ( 0/35000) 0.00 Case B The preffered Stock is Cumilative; the total amount of all dividends $90,000 Total Dividend 90000 Total Value of Preffred Stock 120000 Total CumilativeCash Dividend for preferred stock @10% (120000*10% *3) 36000 TotalCash Dividend for Common Stock (90000-36000) 54000 Cash Dividend for each preferred stock (36000/8000) 4.50 Cash Dividend for each Common Stock ( 54000/35000) 1.54
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