Carlos Company had the following stock outstanding and Retained Earnings at Dece
ID: 2439949 • Letter: C
Question
Carlos Company had the following stock outstanding and Retained Earnings at December 31, 2015: Common Stock (par $1; outstanding, 400,000 shares) $ 400,000 Preferred Stock, 9% (par $10; outstanding, 18,100 shares) 181,000 Retained Earnings 957,000 On December 31, 2015, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2013 or 2014.
Three independent cases are assumed:
Case A: The preferred stock is noncumulative; the total amount of 2015 dividends would be $18,000.
Case B: The preferred stock is cumulative; the total amount of 2015 dividends would be $15,000. Dividends were not in arrears prior to 2013.
Case C: Same as Case B, except the amount is $58,000.
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Required:
1-a. Compute the amount of 2015 dividends, in total, that would be payable to each class of stockholders if dividends were declared as described in each case.
then:
Compute the amount of 2015 dividends per share payable to each class of stockholders for each case. (Round your answers to 2 decimal places.)
1b.Compute the amount of 2015 dividends per share payable to each class of stockholders for each case. (Round your answers to 2 decimal places.)
Explanation / Answer
Req 1-a Total Arrears in Current Total Pref. Common St. Dividend Pref Div paid Pref. Div. Dividend Dividend 18000 0 16290 16290 1710 15000 15,000 0 15000 0 58000 32,580 16290 48870 1130 Note: Annual preferred dividend: $ 181000*9% = 16290 Req 1-b" Total Total Common Pref. Div. Common St. Pref. Div. Dividend per share per share Case-A 16290 1710 0.9 0.004275 Case-B 15000 0 0.83 0 Case-C 48870 1130 2.7 0.002825