Computation of Dividends, Common and Preferred
The company has 10,000 shares of 6%, $100 par preferred stock outstanding. In addition, the company has 100,000 shares of common stock outstanding. The company started business on January 1, 2007. Total cash dividends paid during 2007 and 2008 were $45,000 and $100,000, respectively. Compute the total dividends paid to preferred shareholders and to common shareholders in both years, assuming that (1) the preferred stock is noncumulative and (2) the preferred stock is cumulative.