Purchase Solution

# Preferred Stock Cash Dividend Determination

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In the equity section of Jeans Incorporated the following is listed:

Preferred stock, 5% cumulative, 6,000 shares issued and outstanding \$120,000
Common stock, 1\$ par value, 36,000 shares issued \$180,000
Retained earnings \$250,000
Less: Treasury stock, 6,000 shares, at cost \$(30,000)
Total stockholders equity \$520,000

Questions:
Calculate the amount of dividends allocated to common and preferred stockholders under the following situations:
a. \$18,000 of total dividends and no preferred dividends in arrears:
Total preferred dividends __________
Total common dividends ____________

b. \$24,000 of total dividends and two years of preferred dividends in arrears:
Total preferred dividends ___________
Total common dividends ___________

c. How much did each common stockholder receive per share under each scenario?
Dividend per share under (a): ____________\$
Dividend per share under (b): ____________\$

##### Solution Summary

The attached file contains illustrations and instructions for the calculation of the amount of dividends that should be allocated to common and preferred stockholders under the listed situations.

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