C eztomheducationcomhmtpx connect ACCOUNTING Ch 11 Assignm

C | ? ezto.mheducation.com/hm.tpx connect. ACCOUNTING Ch 11 Assignment value 1.00 points The records of Hoffman Company refected the following balances in the stockholders\' equity accounts at December 31, 2015 Common stock, par $12 per share, 44,500 shares outstanding Preferred stock, 8 percent, par $19 per share, 6,810 shares outstanding. Retained earnings, $229,000 On lanuary 1, 20i, the board of directors was considering the distibution of a s$62 900 cash di dividends were paid during 2014 and 2015 Required: 1. Determine the total and per-share amounts that would be paid to the common stockholders and to the preferred stockholders under two independent assumptions: a. The preferred stock is noncumulative. (Round \"Per Share\" to 2 decimal places and rest to the nearest dollar amount.) otal Paid to the Preferred Stockholders Paid to the Common Stockholders b. The preferred stock is cumulative. (Round \"Per Share\" to 2 decimal places and rest to the nearest dollar amount.) Total Per Share Paid to the Preferred Stockholders Paid to the Common Stockholders

Solution

Common Stock 44500 shares, $12 per share 8% preferred stock 129390 Retained Earnings 229000 i) Preferred stock is non cumulative In case of the preferred stock is non cumulative, dividend is distributed for one year. It does ot accumulate to next year dividend if not paid during the year Preferred Stock Dividend = 8% *6810 shares*$19 per shars $ 10,351.20 Dividend per preferred stock = $10351.20/6810 shares $            1.52 Dividend to common shareholders = $62900- $10351 $ 52,549.00 Dividend per common stock = $52549/44500 shares $            1.18 b) Preferred stock is cumulative In case the dividend is cumuative, the years I which dividend is not paid is accumulated with the next year dividend. In the question dividend is not being paid for 2014 and 2015, therefore in year 2016 the divided for three years will be givien to shareholders. i.e, for 2014, 2015 and 2016 Preferred Stock Dividend = 8% *6810 shares*$19 per share *3 year $ 31,053.60 Dividend per preferred stock = $31053.60/6810 shares $            4.56 Dividend to common shareholders = $62900- $31053.60 $ 31,846.40 Dividend per common stock = $31846.40/44500 shares $            0.72