Rensing, Inc., has $800,000 of 5% preferred stock and $1,300,000 of common stock

ID: 2562019 • Letter: R

Question

Rensing, Inc., has $800,000 of 5% preferred stock and $1,300,000 of common stock outstanding, each having a par value of $10 per share. No dividends have been paid or declared during 2016 and 2017. As of December 31, 2018, it is desired to distribute $353,000 in dividends.

How much will the preferred and common stockholders receive under each of the following assumptions:

(a) The preferred is noncumulative and nonparticipating. (b) The preferred is cumulative and nonparticipating. (c) The preferred is cumulative and fully participating. (d) The preferred is cumulative and participating to 9% total.

Explanation / Answer

Preferred stockholders Common stockholders (a) $ 40,000.00 $ 313,000.00 (b) $ 120,000.00 $ 233,000.00 (c) $ 184,000.00 $ 169,000.00 (d) $ 152,000.00 $ 201,000.00

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Rensing, Inc., has $800,000 of 5% preferred stock and $1,300,000 of common stock

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