ADMS 3595 Lecture Notes - Lecture 15: Lump Sum

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ceruleanpanda909

11 May 2018

School

York University

Department

Administrative Studies

Course

ADMS 3595

Professor

Sandra Iacobelli

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Ex. 15-138 Dividends on preferred shares

Lithuania Corp. has been authorized to issue 20,000 no par value, $6, cumulative and fully

participating preferred shares and 100,000 no par value common shares. The account balances

at December 31, 2014 are:

$6 Preferred shares, 4,000 shares outstanding ............................. $ 400,000

Common shares, 60,000 shares outstanding ................................ 1,600,000

No dividends have been paid since December 31, 2010. The corporation now desires to pay

$280,000 in dividends.

Instructions

Calculate how much the preferred and common shareholders will receive.

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3,600,000 shares of no-par common stock were authorized; 1,050,000 shares were issued on January 1, 2010, at $46 per share.1,200,000 shares of $100 par value, 10.5% cumulative, preferred stock were authorized, and 420,000 shares were issued on January 1, 2010, at $132 per share.Net income for the years ended December 31, 2010, 2011, and 2012, was $15,750,000, $22,350,000, and $26,100,000, respectively.No dividends were declared or paid during 2010 or 2011. However, on December 17, 2012, the board of directors of Permabilt Corp. declared dividends of $37,200,000, payable on February 9, 2013, to holders of record as of January 4, 2013.Of the total amount of dividends declared during 2012, how much will be received by preferred shareholders?

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Permabilt Corp. was incorporated on January 1, 2010, and issued the following stock for cash:3,600,000 shares of no-par common stock were authorized; 1,050,000 shares were issued on January 1, 2010, at $46 per share.1,200,000 shares of $100 par value, 10.5% cumulative, preferred stock were authorized, and 420,000 shares were issued on January 1, 2010, at $132 per share.Net income for the years ended December 31, 2010, 2011, and 2012, was $15,750,000, $22,350,000, and $26,100,000, respectively.No dividends were declared or paid during 2010 or 2011. However, on December 17, 2012, the board of directors of Permabilt Corp. declared dividends of $37,200,000, payable on February 9, 2013, to holders of record as of January 4, 2013.Of the total amount of dividends declared during 2012, how much will be received by preferred shareholders?

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On January 2, 2015, Easton Corporation issued 50,000 shares of 5% cumulative preferred stock at $100 par value. No dividends have been paid to any shareholders since the formation of the corporation. Management wants to issue a dividend to common shareholders on December 31, 2016. What dividend amount, if any, must be paid to the preferred stockholders entitled before any distribution is made to common stockholders?

ADMS 3595 Lecture Notes - Lecture 15: Lump Sum

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