Question

Exercise 15 21 The outstanding capital stock of Oulumber Corporation consists of 2,000 shares of $100 par value, 8% preferred, and 4,500 shares of $50 par value common Assuming that the company has retained earnings of $90,500, all of which is to be paid out in dividends, and that preferred vidends 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 decimal places, eg. $18.487.) (a) The preferred stock is roncumulative and nonparticipating (Round answers to Preferred Common (b) The preferred stock is cumulative and nonparticipating (Round answers to imal places, SIR 7.) Preferred (c) The preferred stock is cumulative and participating (Round the rate d decimal places 1.427 . Round answers to decimal place Click if you would like to Show Work for this question Open Show Work

Answer 1

Answers Non-Cumulative and non Participative Cumulative and Non Participating Cumulative and Participative Preferred 16000 48000 59529 Common 74500 42500 30971 Current Stock Out-Standing Shares Common Stokc @ 50 4500 Preferred Stock8% @ 100 2000 Compute the Annual Dividend on Preferred Stock Preferred Stock Dividend (200000*8%) Divdidend Arraers to Preferres Stock (16000*2) Amount 225000 200000 16000 32000 Non-Cumulative and non Participative Preferred Common 16000 Total 16000 Current Year Arrears Common Stock Total Dividend 74500 74500 74500 90500 16000

Current Year Arrears Common Stock Total Dividend Cumulative and non Participative Preferred Como non 16000 32000 42500 48000 42500 Total 16000 32000 42500 90500 Current Year Arrears Common Stock (225000*8%) Balance Dividend Pro pata Total Dividend Cumulative and Participative Preferred | Common 16000 32000 18000 11529 12971 59529 30971 Total 16000 32000 18000 24500 90500 1 24500 5.7647% Working Notes 26 Amount for Participation 90500-16000-32000-18000 Rate of Participation Rate of Participation = 24500/(200000+225000) Particpating Dividend Preferred Stock 200000*5.7647 Common Stock 225000*5.7647% Total Participating Dividend 115291 12971 24500