The outstanding share capital of Martinez Corporation consists of 2,500 shares of preferred and 7,100 common shares for which $276,900 was received. The preferred shares carry a dividend of $6 per share and have a $100 stated value. Assuming that the company has retained earnings of $80,000 that is to be entirely paid out in dividends and that preferred dividends were not paid during the 3 years preceding the current year, state how much each class of shares should receive if the preferred shares are non-cumulative and non-participating. Dividends Preferred $ eTextbook and Media Common $ Total $
The outstanding share capital of Martinez Corporation consists of 2,500 shares of preferred and 7,100 common shares for which $276,900 was received. The preferred shares carry a dividend of $6 per share and have a $100 stated value. Assuming that the company has retained earnings of $80,000 that is to be entirely paid out in dividends and that preferred dividends were not paid during the 3 years preceding the current year, state how much each class of shares should receive if the preferred shares are non-cumulative and non-participating. Dividends Preferred $ eTextbook and Media Common $ Total $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:The outstanding share capital of Martinez Corporation consists of 2,500 shares of preferred and 7,100 common shares
for which $276,900 was received. The preferred shares carry a dividend of $6 per share and have a $100 stated value.
Assuming that the company has retained earnings of $80,000 that is to be entirely paid out in dividends and that
preferred dividends were not paid during the 3 years preceding the current year, state how much each class of
shares should receive if the preferred shares are non-cumulative and non-participating.
Dividends
Preferred
eTextbook and Media
Dividends
$
Preferred
Assuming that the company has retained earnings of $80,000 that is to be entirely paid out in dividends and that
preferred dividends were not paid during the 3 years preceding the current year, state how much each class of
shares should receive if the preferred shares are cumulative and non-participating.
$
eTextbook and Media
(b)
Preferred
Dividends $
Common
eTextbook and Media
$
Common
$
Assuming that the company has retained earnings of $80,000 that is to be entirely paid out in dividends and that
preferred dividends were not paid during the 3 years preceding the current year, state how much each class of
shares should receive if the preferred shares are cumulative and participating. (Round answers to 0 decimal
places, e.g. 5,275.)
Common
$
(a) The preferred shares are non-cumulative and non-participating.
Total
The preferred shares are cumulative and non-participating.
$
(c) The preferred shares are cumulative and participating.
Payout Ratio
Total
Assume that Martinez's current year net income was $94,700. Calculate the current year payout ratio under each
of the conditions below. (Round answers to 2 decimal places, e.g. 52.75.)
$
Total
$
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