Reference no: EM131786269

Problem

For financial accounting class, but can't figure out how to do it because I was absent. Hopefully one of you will be able to provide the answer, and hopefully an explanation:

On January 1, 2007, the retained earnings of Quigley Company were $432,000. Net income for the succeeding five years was as follows:

2007        $288,000

2008       216,000

2009       4,800

2010        48,000

2011        264,000

The outstanding capital stock of the corporation consisted of 2,000 shares of preferred stock with a par value of $480 per share that pays a dividend of $19.20 per year and 8,000 shares of no-par common stock with a stated value of $240 per share. No dividends were in arrears as of January 1, 2007.

Prepare schedules showing how the net income for these five years was distributed to the two classes of stock if in each of the years the entire current net income was distributed as dividends and the preferred stock was:

a) Cumulative
b) Noncumulative.