Dividing dividends between preferred and common stock Northern Communications has the following stockholders’ equity:
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NORTHERN COMMUNICATIONS Stockholders’ Equity |
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Paid in Capital: |
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Preferred stock, 6%, $11 par, 150,000 shares authorized |
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20,000 shares issued and outstanding |
$ 220,000 |
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Common stock, $3 par, 575,000 shares authorized |
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400,000 shares issued and outstanding |
1,200,000 |
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Paid in capital in excess of par—common |
1,000,000 |
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Total paid in capital |
2,420,000 |
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Retained earnings |
190,000 |
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Total stockholders’ equity |
$2,610,000 |
Requirements
1. First, determine whether preferred stock is cumulative or noncumulative.
2. Compute the amount of dividends to preferred and to common for 2011 and 2012 if total dividends are $12,200 in 2011 and $55,000 in 2012.
3. What is the average price at which each preferred share sold for? What is the average price at which each common share sold for?