Share
Explore BrainMass

Preferred Stock Cash Dividend Determination

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.

$2.19