Question

In: Accounting

Cheyenne Corp. had $120,000 of 8%, $20 par value preferred stock and 15,000 shares of $5...

Cheyenne Corp. had $120,000 of 8%, $20 par value preferred stock and 15,000 shares of $5 par value common stock outstanding throughout 2018. No dividends were paid in 2016 or 2017. Determine the dividend amount that should go to common and preferred shareholders for the following scenarios.

Assuming that total dividends declared in 2018 were $70,000, and that the preferred stock is not cumulative and is not participating.
Common Shareholders’ Dividends
Preferred Shareholders’ Dividends
Assuming that total dividends declared in 2018 were $70,000, and that the preferred stock is cumulative and is not participating.
Common Shareholders’ Dividends
Preferred Shareholders’ Dividends
Assuming that total dividends declared in 2018 were $70,000, and that the preferred stock is not cumulative and is fully participating.
Common Shareholders’ Dividends
Preferred Shareholders’ Dividends

d. Assuming that total dividends declared in 2018 were $70,000, and that the preferred stock is cumulative and is fully participating.
Common Shareholders’ Dividends
Preferred Shareholders’ Dividends

Expert Solution

If the preferred stock is cumulative, dividends not paid in earlier years must also be paid before anything is paid out to common stockholders.

If the preferred stock is participating, after both preferred and common stock holders receive a specified level of dividends, balance dividend distributions are shared with common stockholders in the ratio of the respective par values of participating preference stock and common stock.

Number of preferred shares = $120,000 / $20 = 6,000

Preferred stock dividends = 6,000 shares * $20 par * 8% = $9,600

Common stock dividends = 15,000 shares * $5 par * 8% = $6,000

a.

Common shareholder's dividends = $9,600

Preferred shareholder's dividends = $70,000 - $9,600 = $60,400

b.

Common shareholder's dividends = $9,600 * 3 = $28,800

Preferred shareholder's dividends = $70,000 - $28,800 = $41,200

c.

Common shareholder's dividends = $9,600 + ($70,000 - $9,600 - $6,000) * 6,000 / 21,000 = $25,143

Preferred shareholder's dividends = $6,000 + ($70,000 - $9,600 - $6,000) * 15,000 / 21,000 = $44,857

d.

Common shareholder's dividends = $28,800 + ($70,000 - $28,800 - $6,000) * 6,000 / 21,000 = $38,857

Preferred shareholder's dividends = $6,000 + ($70,000 - $28,800 - $6,000) * 15,000 / 21,000 = $31,143

ekkarill92 answered 1 month ago

Marin Corp. had $100,000 of 7%, $20 par value preferred stock and 12,000 shares of $25...

Marin Corp. had $100,000 of 7%, $20 par value preferred stock and 12,000 shares of $25 par value common stock outstanding throughout 2017. Assuming that total dividends declared in 2017 were $64,000, and that the preferred stock is not cumulative but is fully participating, common stockholders should receive 2017 dividends of what amount? Common stockholders should receive $________________ Assuming that total dividends declared in 2017 were $64,000, and that the preferred stock is fully participating and cumulative with preferred dividends...

Cheyenne Company has two classes of capital stock outstanding: 8%, $20 par preferred and $5 par...

Cheyenne Company has two classes of capital stock outstanding: 8%, $20 par preferred and $5 par common. At December 31, 2017, the following accounts were included in stockholders’ equity. Preferred Stock, 152,200 shares $ 3,044,000 Common Stock, 2,039,000 shares 10,195,000 Paid-in Capital in Excess of Par—Preferred Stock 202,000 Paid-in Capital in Excess of Par—Common Stock 26,684,000 Retained Earnings 4,587,000 The following transactions affected stockholders’ equity during 2018. Jan. 1 32,600 shares of preferred stock issued at $23 per share. Feb....

Question 29 Flounder Corp. had $100,000 of 7%, $20 par value preferred stock and 12,000 shares...

Question 29 Flounder Corp. had $100,000 of 7%, $20 par value preferred stock and 12,000 shares of $25 par value common stock outstanding throughout 2017. Assuming that total dividends declared in 2017 were $64,000, and that the preferred stock is not cumulative but is fully participating, common stockholders should receive 2017 dividends of what amount? Common stockholders should receive $ Assuming that total dividends declared in 2017 were $64,000, and that the preferred stock is fully participating and cumulative with...

Marigold Corp. has 2,700 shares of 8%, $103 par value preferred stock outstanding at December 31,...

Marigold Corp. has 2,700 shares of 8%, $103 par value preferred stock outstanding at December 31, 2017. At December 31, 2017, the company declared a $120,500 cash dividend. Determine the dividend paid to preferred stockholders and common stockholders under each of the following scenarios. 1. The preferred stock is noncumulative, and the company has not missed any dividends in previous years. The dividend paid to preferred stockholders $ The dividend paid to common stockholders $ 2. The preferred stock is...

Assume CGM Corp has issued and outstanding 22,000 shares of 5%, $25 par value preferred stock...

Assume CGM Corp has issued and outstanding 22,000 shares of 5%, $25 par value preferred stock and issued and outstanding 15,000 shares of $15 stated value common stock. The board of directors declares dividends of $100,000 on December 15, 2020, the preferred stock is cumulative, and dividends paid to the preferred stockholders has been as follows: 2017 - $13,750; 2018 - $13,750; and 2019 - $15,000. What amount is allocated to common stockholders?

A corporation issued 20,000 shares of $5 par value 6% preferred stock, and 10,000 shares of...

A corporation issued 20,000 shares of $5 par value 6% preferred stock, and 10,000 shares of $10 par value common stock, when the corporation was formed two years ago. No dividend was declared or paid last year. This year the corporation has $50,000 available for dividends. How much should each share of common stock receive? $3.80 $2.80 $4.40 zero The statement of cash flows helps address questions such as How is the increase in investments financed? How much cash is...

Baur Company has 21,000 shares of $10 par value, 8% preferred stock and 500,000 shares of...

Baur Company has 21,000 shares of $10 par value, 8% preferred stock and 500,000 shares of $1 par value common stock outstanding. As of December 31, 2018, it had $900,000 of Retained earnings. On December 31, 2018, the Board of Directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared in 2016 and 2017 and no dividends were in arrears prior to 2016. The company is considering the following options. Option...

York’s outstanding stock consists of 90,000 shares of 7.0% preferred stock with a $5 par value and also 160,000 shares of common stock with a $1 par value

York’s outstanding stock consists of 90,000 shares of 7.0% preferred stock with a $5 par value and also 160,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends: 2015 total cash dividends $ 19,800 2016 total cash dividends 29,500 2017 total cash dividends 285,000 2018 total cash dividends 435,000 rev: 11_29_2018_QC_CS-149901 Exercise 11-9 Dividends on common and cumulative...

York’s outstanding stock consists of 80,000 shares of 7.5% preferred stock with a $5 par value...

York’s outstanding stock consists of 80,000 shares of 7.5% preferred stock with a $5 par value and also 200,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends: 2015 total cash dividends $ 20,000 2016 total cash dividends 28,000 2017 total cash dividends 200,000 2018 total cash dividends 350,000 rev: 11_29_2018_QC_CS-149901 Exercise 11-9 Dividends on common and cumulative preferred stock LO C2...

Dividends Keener Company has had 800 shares of 8%, $100 par preferred stock and 44,000 shares...

Dividends Keener Company has had 800 shares of 8%, $100 par preferred stock and 44,000 shares of $5 stated value common stock outstanding for the last 3 years. During that period, dividends paid totaled $5,400, $31,000, and $35,400 for each year, respectively. Required: Compute the amount of dividends that Keener must have paid to preferred shareholders and common shareholders in each of the 3 years, given the following 3 independent assumptions: If an amount is zero, enter "0". 1. Preferred...