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C. Preferred stock is fully participating and cumulative. Preferred dividends are 1 year in arrears at the beginning of the year. Andrews Company Schedule of dividends to be paid Preferred Common Dividends in arrears 20.000V Current preferred dividends 20.000V Common proportional share Remainder 4.000 V 6.000V Total Feedback Check My Work When preferred stock is participating preferred stock, preferred shareholders share with the common shareholders in any additional dividends. Additional dividends are paid only after preferred shareholders have been paid their stated dividend amount and common shareholders have been paid at a rate equal to that paid on the preferred stock. Then, if the total dividends paid are greater than the amount needed to meet these dividend requirements, an extra dividend arises. Fully participating preferred shareholders share equally with the common shareholders in any extra dividends. When a corporation pays extra dividends, they are distributed to the fully participating preferred shareholders and common shareholders proportionately based on the respective total par values of each dlass of stock. Partially participating preferred shareholders share in extra dividends, but this participation is limited to a fixed rate or amount per share. 2. For 1(a), compute the dividend yield on the preferred stock and the common stock. Dividend yield Preferred stock 6.000 x Common stock 4.000 x% Feedback Check My Work Dividend Yield- Dividends per Common (or Preferred) Share Market Price per Common (or Preferred) Share

C. Preferred stock is fully participating and cumulative. Preferred dividends are 1 year in arrears at the beginning of the year. Andrews Company Schedule of dividends to be paid Preferred Common Dividends in arrears 20.000V Current preferred dividends 20.000V Common proportional share Remainder 4.000 V 6.000V Total Feedback Check My Work When preferred stock is participating preferred stock, preferred shareholders share with the common shareholders in any additional dividends. Additional dividends are paid only after preferred shareholders have been paid their stated dividend amount and common shareholders have been paid at a rate equal to that paid on the preferred stock. Then, if the total dividends paid are greater than the amount needed to meet these dividend requirements, an extra dividend arises. Fully participating preferred shareholders share equally with the common shareholders in any extra dividends. When a corporation pays extra dividends, they are distributed to the fully participating preferred shareholders and common shareholders proportionately based on the respective total par values of each dlass of stock. Partially participating preferred shareholders share in extra dividends, but this participation is limited to a fixed rate or amount per share. 2. For 1(a), compute the dividend yield on the preferred stock and the common stock. Dividend yield Preferred stock 6.000 x Common stock 4.000 x% Feedback Check My Work Dividend Yield- Dividends per Common (or Preferred) Share Market Price per Common (or Preferred) Share

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Andrews Company has $80,000 available to pay dividends. It has 2,000 shares of 10%, $100 par, preferred stock and 30,000 shares of $10 par common stock outstanding. The preferred stock is selling for $125 per share, and the common stock is selling for $20 per share.

2. For 1(a), compute the dividend yield on the preferred stock and the common stock.

c. Preferred stock is fully participating and cumulative. Preferred dividends are 1 year in arrears at the beginning of the year. Andrews Company Schedule of dividends to be paid Preferred Common Dividends in arrears 20,000 Current preferred dividends 20,000 Common proportional share Remainder 4,000 V 6,000 Total Feedback V Check My Work When preferred stock is participating preferred stock, preferred shareholders share with the common shareholders in any additional dividends. Additional dividends are paid only after preferred shareholders have been paid their stated dividend amount and common shareholders have been paid at a rate equal to that paid on the preferred stock. Then, if the total dividends paid are greater than the amount needed to meet these dividend requirements, an extra dividend arises. Fully participating preferred shareholders share equally with the common shareholders in any extra dividends. When a corporation pays extra dividends, they are distributed to the fully participating preferred shareholders and common shareholders proportionately based on the respective total par values of each class of stock. Partially participating preferred shareholders share in extra dividends, but this participation is limited to a fixed rate or amount per share. 2. For 1(a), compute the dividend yield on the preferred stock and the common stock. Dividend yield Preferred stock 6,000 X % Common stock 4,000 x % Feedback V Check My Work Dividend Yield - Dividends per Common (or Preferred) Share Market Price per Common (or Preferred) Share
Transcribed Image Text:c. Preferred stock is fully participating and cumulative. Preferred dividends are 1 year in arrears at the beginning of the year. Andrews Company Schedule of dividends to be paid Preferred Common Dividends in arrears 20,000 Current preferred dividends 20,000 Common proportional share Remainder 4,000 V 6,000 Total Feedback V Check My Work When preferred stock is participating preferred stock, preferred shareholders share with the common shareholders in any additional dividends. Additional dividends are paid only after preferred shareholders have been paid their stated dividend amount and common shareholders have been paid at a rate equal to that paid on the preferred stock. Then, if the total dividends paid are greater than the amount needed to meet these dividend requirements, an extra dividend arises. Fully participating preferred shareholders share equally with the common shareholders in any extra dividends. When a corporation pays extra dividends, they are distributed to the fully participating preferred shareholders and common shareholders proportionately based on the respective total par values of each class of stock. Partially participating preferred shareholders share in extra dividends, but this participation is limited to a fixed rate or amount per share. 2. For 1(a), compute the dividend yield on the preferred stock and the common stock. Dividend yield Preferred stock 6,000 X % Common stock 4,000 x % Feedback V Check My Work Dividend Yield - Dividends per Common (or Preferred) Share Market Price per Common (or Preferred) Share
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