I am going back to school to get my accounting degree. My teacher doesn't teach from the book, but assigns homework from our text book. He showed us one problem and gave us the answer for practice. Company A 75,000 shares at $5 par value, and 8% cumulative perferred stock and $200,000 share of $1 par value common stock. Last year, the company had no dividends, but this year the company has $108,000. What does each class of stock receive?
My teacher said that the Preferred stockholders get $30,000 for last year and this year. The common stockholders get $48,000.
A different problem says that company A consists of 40,000 shares of noncumulative 7.5% preferred stock with $10 par calue and 100,000 shares of common stock with $1 par value. What does each class get for the following years?
2003 - $10,000
2004 - $24,000
2005 - $100,000
2006 - $196,000
The books says that the answer is $94,000 paid to preferred stock. Can anyone tell me why the two are calculated differently?
2007-01-26
02:15:20
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2 answers
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asked by
Xander
4