Dividends to preferred stockholders and common stockholders
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The ABC Company has had 10,000 shares of 10%, $100 par-valued preferred stock and 80,000 shares of $5 stated-value common stock outstanding for the last three years. During that period, dividends paid totalled $0, $200,000, and $220,000 for each year respectively.
Compute the amount of dividends that must have been paid to preferred stockholders and common stockholders in each of the three years given the following four independent assumptions:
a) Preferred stock is nonparticipating and cumulative.
b) Preferred stock participates up to 12% of its par value and is cumulative.
c) Preferred stock is fully participating and cumulative.
d) Preferred stock is nonparticipating and noncumulative.
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Solution Summary
Computes the amount of dividends that must have been paid to preferred stockholders and common stockholders.
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