From 2012 to 2014, Lumber Liquidators had the following capital structure: The b

Question

From 2012 to 2014, Lumber Liquidators had the following capital structure:

The board of directors determined the total amount available for dividends in each year from 2012 through 2014 as shown in the following table. Complete the table to indicate the portion of the dividend allocated to preferred and common stockholders in each year. Assume that the preferred stock is noncumulative and nonparticipating.

8% Preferred Stock, $10 par, 10,000 shares authorized, 5,000 shares issued and outstanding $50,000 Common Stock, $2 par, 25,000 shares authorized, 20,000 shares issued and outstanding 40,000 Paid-in Capital in Excess of Par: Preferred Stock 60,000 Common Stock 80,000 Total Capital Stock $230,000

Explanation / Answer

Statement showing computations Particulars 2012 2013 2014 Amount available for dividends              8,000.00              5,000.00              3,000.00 Preference Dividend = 5,000*10*8% but limited to income              4,000.00              4,000.00              3,000.00 Amount Available for common stock = Total Div - Pref Div              4,000.00              1,000.00                           -

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