Rensing, Inc., has $800,000 of 5% preferred stock and $1,200,000 of common stock outstanding, each having a par value of $10 per share. No dividends have been paid or declared during 2013 and 2014. As of December 31, 2015, it is desired to distribute $340,000 in dividends.
Instructions
How much will the preferred and common stockholders receive under each of the following assumptions?
(a) The preferred is noncumulative and nonparticipating.
(b) The preferred is cumulative and nonparticipating