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Nat2105 [25]
3 years ago
10

Nottebart Corporation has outstanding 10,000 shares of $100 par value, 6% preferred stock and 60,000 shares of $10 par value com

mon stock. The preferred stock was issued in January 2017, and no dividends were declared in 2017 or 2018.In 2019, Nottebart declares a cash dividend of $300,000. How will the dividend be shared by common and preferred stockholders if the preferred is (a) noncumulative and (b) cumulative?
Business
1 answer:
rosijanka [135]3 years ago
3 0

Answer:

(a) noncumulative

Preferred share:  $120,000

Common share: $180,000

(b) cumulative

Preferred share:  $123,600

Common share: $176,400

Explanation:

Preferred stock outstanding = 10,000 shares * $100 par value = $1,000,000

(a) if the preferred stock interest is noncumulative, the the total dividend paid of 2 years = preferred stock outstanding x rate x 2 years

= $1,000,000 * 6% * 2 = $120,000

Dividend for common stock = total cash dividend - dividend for preferred stock = $300,000 - $120,000 = $180,000

(b) if the preferred stock interest is noncumulative, the the total dividend paid of 2 years = preferred stock outstanding * (1+ rate)^2 - preferred stock outstanding

= $1,000,000*(1+6%)^2 - $1,000,000 = $123,600

Dividend for common stock = $300,000 - $123,600 = $176,400

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point-of-purchase display              

Explanation:

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8 0
3 years ago
Computing second-year depreciation and accumulated depreciationAt the beginning of 2016, Air Asia purchased a used airplane at a
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Answer:

1. a.$4,375,000

  b. $7,500,000

 c. $9,800,000

2. $8,750,000

  $18,200,000

  $17,500,000

Explanation:

1. The computation of the depreciation expense for the second year is presented  below:

a) Straight-line method:

= (Purchase value of airplane - residual value) ÷ (useful life)

= ($40,000,000  - $5,000,000) ÷ (8 years)

= ($35,000,000) ÷ (8 years)  

= $4,375,000

In this method, the depreciation is same for all the remaining useful life

(b) Double-declining balance method:

First we have to find the depreciation rate which is shown below:

= One ÷ useful life

= 1 ÷ 8

= 12.5%

Now the rate is double So, 25%

In year 1, the original cost is $40,000,000 so the depreciation is $10,000,000 after applying the 25% depreciation rate

And, in year 2, the $30,000,000 × 25% = $7,500,000

(c) Units-of-production method:

= (Purchase value of airplane - residual value) ÷ (estimated miles)  

= ($40,000,000  - $5,000,000) ÷ ($5,000,000 miles)

= ($35,000,000) ÷ ($5,000,000 miles)  

= $7 per miles

In first year, it would be

= Miles in first year × depreciation per miles

= 1,200,000 miles × $7

= $8,400,000

Now for the second year, it would be  

= Miles in second year × depreciation per miles

= 1,400,000 miles × $7

= $9,800,000

2. The calculation of the accumulated depreciation balance would be

Straight line method:

= $4,375,000 + $4,375,000

= $8,750,000

Double-declining balance method:

= $10,000,000 + $7,500,000

= $17,500,000

Units-of-production method:

= $8,400,000 + $9,800,000

=  $18,200,000

4 0
3 years ago
When economists say that a good is non-rival in consumption, they mean that:____.
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