Tower Corp. had the following stock outstanding and Retained Earnings at December 31, 2018:$ 304,00068,000288,000Common Stock (par $8; outstanding, 38,000 shares)Preferred Stock, 7% (par $10; outstanding, 6,800 shares)Retained EarningsOn December 31, 2018, the board of directors is considering the distribution of a cash dividend to the common and preferredstockholders. No dividends were declared during 2016 or 2017, and none have been declared yet in 2018. Three independent casesare assumed:The preferred stock is noncumulative; the total amount of 2018dividends would be $13,400.The preferred stock is cumulative; the total amount of 2018 dividendswould be $14,280. Dividends were not in arrears prior to 2016.Same as Case B, except the total dividends are $74,000.Case A:Case B:Case C:Required:1-a. Compute the amount of 2018 dividends, in total that would be payable to each class of stockholders if dividends were declared asdescribed in each case. TIP: Preferred stockholders with cumulative dividends are to be paid dividends for any prior years (inarrears) and for the current year before common stockholders are paid.1-b. Compute per case, the 2018 dividends per share, payable to each class of stockholders.

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Asked Feb 20, 2020
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Tower Corp. had the following stock outstanding and Retained Earnings at December 31, 2018:
$ 304,000
68,000
288,000
Common Stock (par $8; outstanding, 38,000 shares)
Preferred Stock, 7% (par $10; outstanding, 6,800 shares)
Retained Earnings
On December 31, 2018, the board of directors is considering the distribution of a cash dividend to the common and preferred
stockholders. No dividends were declared during 2016 or 2017, and none have been declared yet in 2018. Three independent cases
are assumed:
The preferred stock is noncumulative; the total amount of 2018
dividends would be $13,400.
The preferred stock is cumulative; the total amount of 2018 dividends
would be $14,280. Dividends were not in arrears prior to 2016.
Same as Case B, except the total dividends are $74,000.
Case A:
Case B:
Case C:
Required:
1-a. Compute the amount of 2018 dividends, in total that would be payable to each class of stockholders if dividends were declared as
described in each case. TIP: Preferred stockholders with cumulative dividends are to be paid dividends for any prior years (in
arrears) and for the current year before common stockholders are paid.
1-b. Compute per case, the 2018 dividends per share, payable to each class of stockholders.
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Tower Corp. had the following stock outstanding and Retained Earnings at December 31, 2018: $ 304,000 68,000 288,000 Common Stock (par $8; outstanding, 38,000 shares) Preferred Stock, 7% (par $10; outstanding, 6,800 shares) Retained Earnings On December 31, 2018, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2016 or 2017, and none have been declared yet in 2018. Three independent cases are assumed: The preferred stock is noncumulative; the total amount of 2018 dividends would be $13,400. The preferred stock is cumulative; the total amount of 2018 dividends would be $14,280. Dividends were not in arrears prior to 2016. Same as Case B, except the total dividends are $74,000. Case A: Case B: Case C: Required: 1-a. Compute the amount of 2018 dividends, in total that would be payable to each class of stockholders if dividends were declared as described in each case. TIP: Preferred stockholders with cumulative dividends are to be paid dividends for any prior years (in arrears) and for the current year before common stockholders are paid. 1-b. Compute per case, the 2018 dividends per share, payable to each class of stockholders.

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Expert Answer

Step 1

Following is the computation of amount of dividends and dividend per share in 2018:

Accounting homework question answer, step 1, image 1

Step 2

Case B:

Preferred stock is cumulative; the total amount of 2018 dividend would be $14,280. Dividend were not in arrear prior to 2016.

Accounting homework question answer, step 2, image 1

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