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Class of Preferred Stock

*E15-21 (Preferred Dividends) The outstanding capital stock of Edna Millay Corporation consists of 2,000 shares of $100 par value, 8% preferred, and 5,000 shares of $50 par value common.

Instructions
Assuming that the company has retained earnings of $90,000, 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.
(b) The preferred stock is cumulative and nonparticipating.
(c) The preferred stock is cumulative and participating. (Round dividend rate percentages to four decimal places.)

Solution Summary

This solution contains step-by-step calculations in an Excel file to determine how much each class of stock would receive under three different scenarios.

$2.19