Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 27

Preferred stock—calculate dividend amounts Calculate the annual cash dividends required to be paid for each of the following preferred stock issues:

Required:

a. $3.75 cumulative preferred, no par value; 200,000 shares authorized, 161,522 shares issued. (The treasury stock caption of the stockholders’ equity section of the balance sheet indicates that 43,373 shares of this preferred stock issue are owned by the company.)

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b. 6%, $40 par value preferred, 100,000 shares authorized, 85,400 shares issued, and 73,621 shares outstanding.

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c. 11.4% cumulative preferred, $100 stated value, $104 liquidating value; 50,000 shares authorized, 43,200 shares issued, 37,600 shares outstanding.

Step 1 of 4

Preferred stock-compute dividend amounts

Preferred stock: Preferred stock usually has a dividend that should be paid out earlier than dividends to common or equity stockholders.