Please show all work to ensure accuracy. Thank you The outstanding capital stock

Question

Please show all work to ensure accuracy. Thank you

The outstanding capital stock of WZY CO. consists of 2,200 shares of $100 par value, 7% preferred, and 4,900 shares of $50 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.) Preferred Common 17150 70850 (b) The preferred stock is cumulative and nonparticipating. (Round answers to O decimal places, e.g. $38,487.) Preferred Common 51450 36550 (c) The preferred stock is cumulative and participating. (Round the rate of participation to 4 decimal places, e.g. 1.4278%. Round answers to 0 decimal places, eg, $38,487.) Preferred Common 51450 36550

Explanation / Answer

a)

Total dividend amount to be distributed = 88000

Dividend paid to Preferred stock holders = 2200*100*7% = 15400

Dividend paid to Common stock holders = 88000 - 15400 = 72600

b)

Total dividend amount to be distributed = 88000

Dividend paid to Preferred stock holders = (2200*100*7%) *(2+1) = 15400*3 = 46200

Dividend paid to Common stock holders = 88000 - 46200 = 41800

c)

Total dividend amount to be distributed = 88000

Dividend paid to Preferred stock holders = (2200*100*7%) *(2+1) = 15400*3 = 46200

Dividend paid to Common stock holders = 88000 - 46200 = 41800

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