Pattering Corp. has 4,000 shares of $10 par common stock outstanding and 1,000 shares of $100 par 8% preferred stock outstanding. Pattering expects to pay annual dividends of $7,000, $9,000, $28,000, and $48,000 respectively for the next four years.
Instructions: By completing the following items, indicate how the dividends should be distributed in each case if the preferred stock is given the rights or the restrictions indicated.
1. the preferred stock is cumulative and nonparticipating
2. the preferred stock is noncumulative and nonparticipating