Question

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 in arrears for 2016, preferred stockholders should receive 2017 dividends totaling what amount?

Preferred stockholders should receive. $___________________

Assuming that total dividends declared in 2017 were $30,000, that the preferred stock is cumulative, nonparticipating, and was issued on January 1, 2016, and that $5000 of preferred dividends were declared and paid in 2016, the common stockholders should receive 2017 dividends totaling what amount?

Common stockholders should receive $______________________

I have looked at some other examples but I don't understand which number is the answer since there is only 1 answer.

Answer 1

			Number of shares	Par Value	Total Value	Interest @ 7% Per year on preferred shares
	Peferred Capital =		5000	$                         20	$                  1,00,000	$                                                            7,000
	Common Share Capital =		12000	$                         25	$                  3,00,000
	Cumulative means the if the preference dividend is not paid in the last year then that shoul be accumulate
	in next years payment ot it will carry forward as unpaid dividend
	IF THE PREFERENCE SHARES ARE NON CUMULATIVE
	Year	total Cash Dividend Paid (A)	Paid to Preferred Stock (B)	Paid to Common Shares (A -B)	Dividend in the arreas	Remarks
	Option 1	$               64,000.00	$                                       7,000.00	$           57,000.00	$                               -	Answer= Common Shareholder will receive the $ 57,000
	IF THE PREFERENCE SHARES ARE CUMULATIVE
	Year	total Cash Dividend Paid (A)	Paid to Preferred Stock (B)	Paid to Common Shares (A -B)	Dividend in the arreas	Remarks
	Option 2	$               64,000.00	$                                     14,000.00	$           50,000.00	$                               -	Answer = Preferred shareholders will received the $ 7,000 for the last year and $ 7,000 in current year also. So total is in the year = $14,000
	IF THE PREFERENCE SHARES ARE CUMULATIVE
	Year	total Cash Dividend Paid (A)	Paid to Preferred Stock (B)	Paid to Common Shares (A -B)	Dividend in the arreas	Remarks
	Option 3	$               30,000.00	$                                       9,000.00	$           21,000.00	$                               -
	Amount paid to Preference Share holders is $ 7,000 for the current year + $ 2000 ($ 7,000 - $ 5,000) for the last year
	Common share holders will receive the Balance $ 21,000