Ritz Company had the following stock outstanding and Retained Earnings at Decemb

Question

Ritz Company had the following stock outstanding and Retained Earnings at December 31. 2015: Common stock (par S1f: outstanding, 490,00 shares) Preferred stock, 7% (par $10; outstanding; 20,900 shares Retained earnings 490,000 209.000 899.000 On December 31, 2015. the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2013 or 2014. Three independent cases are assumed Case A: The preferred stockis late; the total amount of 2015 dividends would be $29,000 Case B: The preferred stock is cumulative: the total amount of 2015 dividends would be 529.000 Case C: Same as Case B, except the amount is $74.000. Required: 1-a. Compute the amount of dividends in total payable to each class of stockholders if dividends were ividends were not in arrears prior to 2013 declared as described in each case. Case A Case B Case C Preferred Common Total 0 $ 0 1-b. Compute the amount of dividends per share payable to each olass of stockholders if dividends were declared as described in each case. (Round your answers to 2 decimal place Case ACase B Case C Preferred Common

Explanation / Answer

Dividend per year on Preferred = 7 % ( 10 * 20900) = 14630

Dividend on Common = Total Dividend Declacred - Dividend paid on Preferred

Note : In case B and C , we first calculate cumulative Dividend on Preferred, which is 14630 * 3 = 43890,then we pay the dues to Preferred and then the left out to Common.

Dividend Per Share = Dividend Paid / No. of Shares

Leave a comment if there is doubt in any calculation.

Case A Case B Case C Preferred 14630 29000 43890 Common 14370 0 30110 Total 29000 29000 74000

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

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