Problem:
The shareholders’ equity of Kramer Industries includes the data shown below. During 2012, cash dividends of $150 million where declared. Dividends were not declared in 2010 or 2011
Require:
Determine the amount of dividends payable to preferred shareholders and to common shareholders under each of the following two assumptions regarding the characteristics of the preferred stock.
Assumption A – The preferred stock is noncumulative
Assumption B – The preferred stock is cumulative