Answered: Stockholders' equity of Ernst Company… | bartleby

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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Question

Stockholders' equity of Ernst Company consists of 80,000 shares of $5 par value, 10% cumulative preferred stock and
280,000 shares of $1 par value common stock. Both classes of stock have been outstanding since the company's
inception. Ernst did not declare any dividends in the prior year, but it now declares and pays a $125,000 cash dividend at
the current year-end.
Determine the amount distributed to each class of stockholders for this two-year-old company.
Calculation of preferred dividend:
Total cash dividend
To preferred shareholders
To common shareholders
Par Value per
Preferred
Share
Dividend
Rate
%
Dividend per
Preferred
Share
Number of
Preferred
Shares
Preferred
Dividend for
two years

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