The shareholders’ equity of Kramer Industries includes the data shown below. During 2017, cash dividends of $150 million were declared. Dividends were not declared in 2015 or 2016. ($ in millions) Common stock $200 Paid-in capital—excess of par, common 800 Preferred stock, 10%, nonparticipating 100 Paid-in capital—excess of par, preferred 270 Required: Determine the amount of dividends payable to preferred shareholders and to common shareholders under each of the following two assumptions regarding the characteristics of the preferred stock. Assumption A —The preferred stock is noncumulative. Assumption B —The preferred stock is cumulative.

Question

The shareholders’ equity of Kramer Industries includes the data shown below. During 2017, cash dividends of $150 million were declared. Dividends were not declared in 2015 or 2016. ($ in millions) Common stock $200 Paid-in capital—excess of par, common 800 Preferred stock, 10%, nonparticipating 100 Paid-in capital—excess of par, preferred 270 Required: Determine the amount of dividends payable to preferred shareholders and to common shareholders under each of the following two assumptions regarding the characteristics of the preferred stock. Assumption A —The preferred stock is noncumulative. Assumption B —The preferred stock is cumulative.

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