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Dividends Keener Company has had 1,400 shares of 6%, $100 par preferred stock and 32,000 shares...

Dividends

Keener Company has had 1,400 shares of 6%, $100 par preferred stock and 32,000 shares of $5 stated value common stock outstanding for the last 3 years. During that period, dividends paid totaled $6,900, $26,400, and $27,600 for each year, respectively.

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 independent assumption:

1. Preferred stock is fully participating and cumulative.

Keener Company

Schedule of Dividends

Preferred

Common

Total

Year 1

$ 6900

$ 0

$ 6900

Year 2

$ ??

$ 26400

Year 3

$ ??

$ 27600

Expert Solution

Preferred stock is fully participating and cumulative.
Statementshowing Computations
Paticulars	Year 1	Year 2	Year 3
Total Dividend Paid	6,900.00	26,400.00	27,600.00
Preference Dividend to be paid = 1400 * 100 * 6%	8,400.00	8,400.00	8,400.00
Preference Dividend Paid = Existing + arrears	6,900.00	9,900.00	8,400.00

Dividend available for common stock	-	16,500.00	19,200.00

Arrears of preference Dividend	1,500.00	-	-

ekkarill92 answered 1 year ago

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