Problem: The Rosewell Co. has had 5,000 shares of 9%, $100 par-value preferred stock and 10,000 shares of $10 par-value common stock for the last two years. During the most recent year , dividends paid totaled $65,000; in the prior year, dividends paid totaled $40,000.
Compute the amount of dividends that must have been paid to preferred stockholders and common stockholders in each year, given the following independent assumptions:
a) Preferred stock is fully participating and cumulative.
b) Preferred stock is nonparticipating and noncumulative.
c) Preferred stock participates up to 10% of its par value and is cumulative.
d) Preferred stock is nonparticipating and cumulative.