Reference no: EM131785517

Problem

Ritz Company had the following stock outstanding and Retained Earnings at December 31, 2015:

Common stock (par $1; outstanding, 520,000 shares) $ 520,000
Preferred stock, 8% (par $10; outstanding, 21,200 shares) 212,000
Retained earnings 902,000

On December 31, 2015, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2013 or 2014.

Three independent cases are assumed:

Case A:

The preferred stock is noncumulative; the total amount of 2015 dividends would be $32,000.

Case B:

The preferred stock is cumulative; the total amount of 2015 dividends would be $32,000. Dividends were not in arrears prior to 2013.

Case C:

Same as Case B, except the amount is $77,000.

Required:

1-a. Compute the amount of dividends in total payable to each class of stockholders if dividends were declared as described in each case.

1-b. Compute the amount of dividends per share payable to each class of stockholders if dividends were declared as described in each case. (Round your answers to 2 decimal places.)