# 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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Step 1

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

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.

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