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umka2103 [35]
2 years ago
14

On January 1, 2019, the board of directors was considering the distribution of a $63,500 cash dividend. No dividends were paid d

uring 2017 and 2018. Required: Determine the total and per-share amounts that would be paid to the common stockholders and to the preferred stockholders under two independent assumptions: The preferred stock is noncumulative. The preferred stock is cumulative. Why were the dividends per share of common stock less for the cumulative preferred stock than the noncumulative preferred stock
Business
1 answer:
Eduardwww [97]2 years ago
5 0

Answer:

1-a. We have:

Total amount to be paid as dividend to preferred stockholders = $9,312.40

Amount to be paid as dividend per share to preferred stockholders = $1.24 per share

Total amount to be paid as dividend to common stockholders = $54,287.60

Amount to be paid as dividend per share to common stockholders = $1.13 per share

1-b. We have:

Total amount to be paid as dividend to preferred stockholders = $27,937.20

Amount to be paid as dividend per share to preferred stockholders = $3.72 per share

Total amount to be paid as dividend to common stockholders = $35,662.80

Amount to be paid as dividend per share to common stockholders = $0.74 per share

2. The reason is that the unpaid dividends in 2017 and 2018 were carried forward and paid together with 2019 dividend to cumulative preferred stockholders, but this cannot be done when the preferred stock is noncumulative.

3. Some the factors include making preferred stock noncumulative, declaration of a higher cash dividend, redemption of redeemable preference shares so that only common stockholders receive dividends, and among others.

Explanation:

Note: This question is not complete and there is an error in the amount of the dividend being considered. The complete question is therefore presented with the correct dividend amount before answering the question as follows:

The records of Hoffman Company reflected the following balances in the stockholders' equity accounts at December 31, 2018:

Common stock, par $12 per share, 48,000 shares outstanding.

Preferred stock, 8 percent, par $15.5 per share, 7,510 shares outstanding.

Retained earnings, $236,000.

On January 1, 2019, the board of directors was considering the distribution of a $63,600 cash dividend. No dividends were paid during 2017 and 2018.

Required:

1. Determine the total and per-share amounts that would be paid to the common stockholders and to the preferred stockholders under two independent assumptions:

a. The preferred stock is noncumulative.

b. The preferred stock is cumulative.

2. Why were the dividends per share of common stock less for the cumulative preferred stock than the noncumulative preferred stock?

3. What factors would cause a more favorable dividend for the common stockholders?

The explanation of the answrs is now given as follows:

1-a. Determine the total and per-share amounts that would be paid to the common stockholders and to the preferred stockholders under the assumption that the preferred stock is noncumulative.

Total amount to be paid as dividend to preferred stockholders = Annual preferred stock dividend = 8% * $15.5 * 7,510 = $9,312.40

Amount to be paid as dividend per share to preferred stockholders = Total amount to be paid as dividend to preferred stockholders / Number of Preferred shares outstanding = $9,312.40 / 7,510 = $1.24 per share

Total amount to be paid as dividend to common stockholders = Amount of cash dividend being considered - Total amount to be paid as dividend to preferred stockholders = $63,600 - $9,312.40 = $54,287.60

Amount to be paid as dividend per share to common stockholders = Total amount to be paid as dividend to common stockholders / Number of common shares outstanding = $54,287.60 / 48,000 = $1.13 per share

1-b. Determine the total and per-share amounts that would be paid to the common stockholders and to the preferred stockholders under the assumption that the preferred stock is cumulative.

Annual preferred stock dividend = 8% * $15.5 * 7,510 = $9,312.40

Total amount to be paid as dividend to preferred stockholders = Annual preferred stock dividend for 3 years for 2017, 2018 and 2019 = $9,312.40 * 3 = $27,937.20

Amount to be paid as dividend per share to preferred stockholders = Total amount to be paid as dividend to preferred stockholders / Number of Preferred shares outstanding = $27,937.20 / 7,510 = $3.72 per share

Total amount to be paid as dividend to common stockholders = Amount of cash dividend being considered - Total amount to be paid as dividend to preferred stockholders = $63,600 - $27,937.20 = $35,662.80

Amount to be paid as dividend per share to common stockholders = Total amount to be paid as dividend to common stockholders / Number of common shares outstanding = $35,662.80 / 48,000 = $0.74 per share

2. Why were the dividends per share of common stock less for the cumulative preferred stock than the noncumulative preferred stock?

The reason is that the unpaid dividends in 2017 and 2018 were carried forward and paid together with 2019 dividend to cumulative preferred stockholders, but this cannot be done when the preferred stock is noncumulative.

3. What factors would cause a more favorable dividend for the common stockholders?

Some the factors include making preferred stock noncumulative, declaration of a higher cash dividend, redemption of redeemable preference shares so that only common stockholders receive dividends, and among others

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Answer:

The Weighted Average cost of capital measures the cost to the company of its current capital structure by using the weights of the various capital measures. WACC usually uses market values so;

Total amount = Debt + Preferred stock + common equity

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Compared to traditional nonprofit startups, enterprising nonprofits are far less likely to survive in business after the first five years: FALSE

<h3>Traditional nonprofit startups and enterprising nonprofits startups:</h3>
  • Enterprising Non-Profits, or enp, is a one-of-a-kind collaborative program that encourages and supports the establishment and growth of social enterprises as a means of building successful non-profit organizations and healthier communities.
  • A tax-exempt organization created for religious, charitable, literary, artistic, scientific, or educational objectives is known as a non-profit enterprise.
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As it is given in the description itself, unlike traditional nonprofit starts, enterprising nonprofits are considerably more likely to survive after the first five years.

Therefore, the statement "compared to traditional nonprofit startups, enterprising nonprofits are far less likely to survive in business after the first five years" is FALSE.

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Complete question:

Compared to traditional nonprofit startups, enterprising nonprofits are far less likely to survive in business after the first five years. TRUE or FALSE

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A bank has stock shares of $100,000, property assets of $90,000, and cash of $10,000. If households and businesses decide to dep
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The answer is stock shares = $100,000, property assets = $90,000,       cash = $60,000, and loans & advences = $50,000

Given,

stock shares = $100,000,

property assets = $90,000,

and cash = $10,000.

households and businesses decide to deposit $50,000 in the bank as checkable deposits.

The balance sheet is a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time.

It also details the balance of income and expenditure over the preceding period.

Therefore when households and businesses decide to deposit $50,000 in the bank as checkable deposits, it will be shown in balance sheet as:

Cash = Previous balance + checkable deposits

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Loans & advances : checkable deposits = $50,000

Hence, the balance sheet will be stock shares = $100,000, property assets = $90,000, cash = $60,000, and loans & advences = $50,000.

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