Rensing, Inc., has $800,000 of 8% preferred stock and $1,200,000 of common stock
ID: 2498633 • Letter: R
Question
Rensing, Inc., has $800,000 of 8% preferred stock and $1,200,000 of common stock outstanding, each having a par value of $10 per share. No dividends have been paid or declared during 2009 and 2010. As of December 31, 2011, it is desired to distribute $488,000 in dividends. Instructions: Determine how much the preferred and common stockholders will receive under each of the following assumptions. The preferred is noncumulative and nonparticipating. The preferred is cumulative and nonparticipating. The preferred is cumulative and fully participating. The preferred is cumulative and participating to 12% total
Explanation / Answer
Note :- For dividend payment purpose, following information needs to be understand.....
Type 1 Total Total Dividends distributed 488,000 Less : Preferred non cumulative & non participating Year 2009 - Year 2010 - Year 2011 (64,000) Balance to common stock holders 424,000 Fno of common stock outstanding (1200000/10) 120,000 Dividend per common stock 4 Type 2 Total Total Dividends distributed 488,000 Less : Preferred cumulative & non participating Year 2009 (64,000) Year 2010 (64,000) Year 2011 (64,000) Balance to common stock holders 296,000 Fno of common stock outstanding (1200000/10) 120,000 Dividend per common stock 2 Type 3 Total Total Dividends distributed 488,000 Less : Preferred cumulative & fully participating Year 2009 (64,000) Year 2010 (64,000) Year 2011 (64,000) Balance to common stock holders 296,000 Fno of common stock outstanding (1200000/10) 120,000 Dividend per common stock 2