Toggle\'s Fishing Fleet had 20,000 shares of 5%, $20 par value preferred stock a
ID: 2381356 • Letter: T
Question
Toggle's Fishing Fleet had 20,000 shares of 5%, $20 par value preferred stock and 15,000 shares of $25 par value common stock outstanding throughout 2012. These data apply to each of the independent solutions below.
1.) Assuming that total dividends declared in 2012 were $35,000 and that the preferred stock is not cumulative, common stockholders should recieve total 2012 dividends of?
2.) Assuming that the total dividends declared in 2012 were 92,000 and that the preferred stock is cumulative with two years' preferred dividends in arrears on December 31, 2012, the preferred stockholders shoukd recieve 2012 dividends totaling?
Explanation / Answer
DIVIDEND PAYABLE ON PREFERRED STOCK = 5% OF(20*20000)
=20000
ANS-1] TOTAL DIVIDENDS DECLARED IN 2012 = 35000
LESS: DIVIDEND PAID ON PREFERRED STOCK = 20000
THEREFORE DIVIDEND PAID ON COMMON STOCK = 35000-20000
=15000
ANS-2]TOTAL DIVIDENDS DECLARED IN 2012 = 92000
LESS: DIVIDENT ON PREFEERED SHARES i.e. CURRENT YEAR DIVIDEND + TWO YEAR CUMULATIVE DIVIDEND [20000 + 20000*2] = 60000
THEREFORE DIVIDEND PAID ON COMMON STOCK= 92000-60000
=32000