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Sweet Company’s outstanding stock consists of 1,000 shares of noncumulative 5% preferred stock with a $100 par value and 10,000 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

The total amount of dividends paid to preferred and common shareholders over the three-year period is:

a. $15,000 preferred; $25,000 common.

b. $11,000 preferred; $29,000 common.

c. $5,000 preferred; $35,000 common.

d. $12,000 preferred; $28,000 common.

e. $10,000 preferred; $30,000 common.

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Joshua Stredder
Joshua StredderLv10
24 Jan 2021

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Analyzing Cash Dividends on Preferred and Common Stock
Potter Company has outstanding 14,000 shares of $50 par value, 10% preferred stock and 30,000 shares of $5 par value common stock. During its first three years in business, it declared and paid no cash dividends in the first year, $280,000 in the second year, and $70,000 in the third year.

(a) If the preferred stock is cumulative, determine the total amount of cash dividends paid to each class of stock in each of the three years.

Distibution to
Preferred Common Stock
Year 1 $Answer $Answer
Year 2 $Answer $Answer
Year 3 $Answer $Answer


(b) If the preferred stock is noncumulative, determine the total amount of cash dividends paid to each class of stock in each of the three years.

Distibution to
Preferred Common Stock
Year 1 $Answer $Answer
Year 2 $Answer $Answer
Year 3 $Answer $Answer

Please give explanation of the answers! :)

Use the following information about Willis Company to answer the next two questions:

Willis Company has 5,000 shares of $100, 4% preferred stock outstanding, and 4,000 shares of $4 par common stock outstanding. Willis Company was unable to declare dividends in 2009 and 2010 but declares total dividends of $70,000 for 2011.

30. How much of the $70,000 will go to the common shareholders if the preferred stock is noncumulative?

$60,000

$44,000

$30,000

$20,000

$50,000

31. How much of the $70,000 will go to the preferred shareholders if the preferred stock is cumulative?

$40,000

$20,000

$60,000

$70,000

$44,000

2. Kilgore Auto Parts reported the following information at December 31, 2004:

Preferred stock, 10%, $10 par value, cumulative $60,000

Common stock, $2 par value 10,000

Additional paid-in capital – Common stock 30,000

Retained earnings 50,000

Total contributed capital and retained earnings 150,000

Less: Treasury stock (100 shares common stock at cost) (5,000)

Total stockholders’ equity $145,000

A) How many shares of common stock are issued?

B) How many shares of preferred stock are issued?

C) How many shares of common stock are outstanding?

D) What was the average price paid for the treasury shares when the company reaquired them?

E) What is the dividend PER SHARE that preferred shareholders are entitled to when a dividend is declared?

F) What was the average price of common shares when they were issued?

G) If a 15% stock dividend were issued, by how much would the total stockholders’ equity balance change?

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