1. The allocation of dividend to each class of stock of Adham Corporation, based on 9% Preferred Stock non-cumulative dividend, is as follows:
Preferred Common
Stockholders Stockholders
Dividend rate 9% Residual
December 2017 $80,000 $80,000 $0
December 2018 195,000 $180,000 $15,000 ($195,000 - $180,000)
December 2019 300,000 $180,000 $120,000 ($300,000 - $180,000)
2. The allocation of dividend to each class of stock, based on 10% Preferred Stock cumulative dividend is as follows:
Preferred Cumulative Common
Stockholders Dividend Stockholders
Dividend rate 10% Next year Residual
December 2017 $80,000 $80,000 $120,000 $0
December 2018 195,000 $195,000 125,000 $0
December 2019 300,000 $300,000 25,000 $0
<h3>Data and Calculations:</h3>
40,000 shares at $50 par (Preferred Stock)
200,000 shares at $5 par (Common Stock)
Dividend Declared:
December 2017 = $80,000
December 2018 = $195,000
December 2019 = $300,000
Preferred Dividend Rate = 9% non-cumulative
Preferred Dividend Rate = 10% cumulative
<h3>Yearly Preferred Dividend:</h3>
Based on 9% = $180,000 ($50 x 40,000 x 9%)
Based on 10% = $200,000 ($50 x 40,000 x 10%)
Learn more about cumulative and non-cumulative preferred stock here: brainly.com/question/25652712 and brainly.com/question/15858679
