Explain the preferred stock is cumulative and participating

Reference no: EM13215792

The outstanding capital stock of Pennington Corporation consists of 2,100 shares of $109 par value, 6% preferred, and 5,800 shares of $58 par value common.

Assuming that the company has retained earnings of $85,000, all of which is to be paid out in dividends, and that preferred dividends were not paid during the 2 years preceding the current year, state how much each class of stock should receive under each of the following conditions.

(a) The preferred stock is noncumulative and nonparticipating.

(b) The preferred stock is cumulative and nonparticipating.

Reference no: EM13215792

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