Dividends Keener Company has had 700 shares of 7%, $100 par preferred stock and
ID: 2559734 • Letter: D
Question
Dividends Keener Company has had 700 shares of 7%, $100 par preferred stock and 46,000 shares of $5 stated value common stock outstanding for the last 3 years. During that period, dividends paid totaled $3,700, $29,400, and $29,400 for each year, respectively.
3. Preferred stock is fully participating and cumulative.
Keener Company
Schedule of Dividends
Preferred
Common
Total
Year 1
$ 3700
$ 0
$ 3700
Year 2
$ ???
$ ???
$ 29400
Year 3
$ ???
$ ???
$ 29400
Keener Company
Schedule of Dividends
Preferred
Common
Total
Year 1
$ 3700
$ 0
$ 3700
Year 2
$ ???
$ ???
$ 29400
Year 3
$ ???
$ ???
$ 29400
Explanation / Answer
Preferred stock dividend should always issue yearly. if its not distributed any year or short distribution balance will accumulate to next year. next year common stock dividend will distribute after distributing preferred dividends with arrears. here preferred dividend is (700 * $100)*7% = $4,900
Keener company Schedule of dividends Preferred Common Total Year 1 $ 3,700 $ 3,700 Year 2 $4,900 + ($4,900-$3,700) = $6,100 $29,400 - $6,100 = $23,300 $ 29,400 Year 3 $ 4,900 $29,400 - $4,900 = $24,500 $ 29,400