Carlos Company had the following stock outstanding and Retained Earnings at December 31, 2018: Common Stock (par $1; outstanding, 560,000 shares)$560,000Preferred Stock, 9% (par $10; outstanding, 19,700 shares) 197,000Retained Earnings 973,000 On December 31, 2018, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2016 or 2017. Three independent cases are assumed: Case A:The preferred stock is noncumulative; the total amount of 2018 dividends would be $31,000.Case B:The preferred stock is cumulative; the total amount of 2018 dividends would be $31,000. Dividends were not in arrears prior to 2016.Case C:Same as Case B, except the amount is $74,000.Required:1-a. Compute the amount of 2018 dividends, in total, that would be payable to each class of stockholders if dividends were declared as described in each case.

Dividend means the profit earned by the company distributed to the shareholders who put their money in company's stock.CASE 1: The preferred stock is noncumulative; the total amount of 2018 dividends would be $31,000. CASE 2: The preferred stock is cumulative; the total amount of 2018 dividends would be $31,000. Dividends were not in arrears prior to 2016. CASE 3: Same as Case B, except the amount is $74,000.

Answered: Carlos Company had the following stock…

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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Carlos Company had the following stock outstanding and Retained Earnings at December 31, 2018:


Common Stock (par $1; outstanding, 560,000 shares)	$	560,000
Preferred Stock, 9% (par $10; outstanding, 19,700 shares)		197,000
Retained Earnings		973,000

On December 31, 2018, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2016 or 2017. Three independent cases are assumed:

Case A:	The preferred stock is noncumulative; the total amount of 2018 dividends would be $31,000.
Case B:	The preferred stock is cumulative; the total amount of 2018 dividends would be $31,000. Dividends were not in arrears prior to 2016.
Case C:	Same as Case B, except the amount is $74,000.

Required:

1-a. Compute the amount of 2018 dividends, in total, that would be payable to each class of stockholders if dividends were declared as described in each case.

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