Question

Chicago Company reported the following information at the end of the current year: Common stock ( $10 par value; 43,000 shares outstanding) $ 430,000 Preferred stock, 10% ( $10 par value; 8,800 shares outstanding) 88,000 Retained earnings 285,000 The board of directors is considering the distribution of a cash dividend to the two groups of stockholders. No dividends were declared during the previous two years. Three independent cases are assumed:

Case A: The preferred stock is noncumulative; the total amount of dividends is $35,000.

Case B: The preferred stock is cumulative; the total amount of dividends is $26,400.

Case C: The preferred stock is cumulative; the total amount of all dividends is $90,800 .

Required: 1. Compute the amount of dividends, in total and per share, that would be payable to each class of stockholders for each case. (Round "Dividends per Share" to 2 decimal places.)

Answer 1

Required: 1. Compute the amount of dividends, in total and per share, that would be payable to each class of stockholders for each case.

Case A: The preferred stock is noncumulative; the total amount of dividends is $35,000.

	Preferred		Common
	Amount	Per share	Amount	Per share
Dividend	8800	1	26200	0.61

Case B: The preferred stock is cumulative; the total amount of dividends is $26400.

	Preferred		Common
	Amount	Per share	Amount	Per share
Dividend	26400	3	0	0

Case C: The preferred stock is cumulative; the total amount of dividends is $90800.

	Preferred		Common
	Amount	Per share	Amount	Per share
Dividend	26400	3	64400	1.50