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    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): ____________$

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    https://brainmass.com/business/accounting/preferred-stock-cash-dividend-determination-515396

    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

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