Reference no: EM132571761

Question - The outstanding share capital of Marigold corporation consists of 3200 shares of preferred and 6800 common shares for which $238000 was received. The preferred shares carry a dividend of $6 per share and have a $100 stated value.

A) Assuming that the company has retained earnings of $86000 that is to be entirely 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 shares should receive if the preferred shares are non- cumulative and non-participanting.

B) Assuming that the company has retained earnings of $86000 that is to be entirely 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 shares should receive if the preferred shares are non- cumulative and non-participanting.

C) Assuming that the company has retained earnings of $86000 that is to be entirely 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 shares should receive if the preferred shares are non- cumulative and non-participanting.

D) Assume that Marigold's current year net income was $90,500. Calculate the current year payout ratio under each of the collections below.

a) The preferred shares are non- cumulative and non- participanting.

b) The preferred share are cumulative and non- participating.

c) The preferred shares are cumulative and participating.