Problem
The shareholders' equity of Kramer Industries includes the data shown below. During 2017, cash dividends of $250 million were declared. Dividends were not declared in 2015 or 2016.
($ in millions)
Common stock $ 400
Paid-in capital-excess of par, common 1,200
Preferred stock, 8%, nonparticipating 200
Paid-in capital-excess of par, preferred 480
Required:
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.