EXERCISE 15-21

EXERCISE 15-21 - \$44,444 \$25,556 \$70,000 *Additional amount...

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*EXERCISE 15-21 (10–15 minutes) Preferred Common Total (a) Preferred stock is noncumulative, nonparticipating (2,000 X \$100 X 6%) \$12,000 Remainder (\$70,000 – \$12,000) \$58,000 \$70,000 (b) Preferred stock is cumulative, nonparticipating (\$12,000 X 3) \$36,000 Remainder (\$70,000 – \$36,000) \$34,000 \$70,000 *EXERCISE 15-21 (Continued) Preferred Common Total (c) Preferred stock is cumulative, participating \$44,444 \$25,556 \$70,000 The computation for these amounts is as follows: Preferred Common Total Dividends in arrears (2 X \$12,000) \$24,000 \$24,000 Current dividend 12,000 12,000 Pro-rata share to common (5,000 X \$50 X 6%) \$15,000 15,000 Balance dividend pro-rata 8,444 10,556 19,000*

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Unformatted text preview: \$44,444 \$25,556 \$70,000 *Additional amount available for participation (\$70,000 \$24,000 \$12,000 \$15,000) 19,000 Par value of stock that is to participate Preferred (2,000 X \$100) \$200,000 Common (5,000 X \$50) 250,000 450,000 Rate of participation \$19,000 \$450,000 4.2222% Participating dividend Preferred, 4.2222% X \$200,000 \$ 8,444 Common, 4.2222% X \$250,000 10,556 \$19,000 Note to instructor: Another way to compute the participating amount is as follows: \$200,000 Preferred \$450,000 X \$19,000 \$ 8,444 \$250,000 Common \$450,000 X \$19,000 10,556 \$19,000...
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EXERCISE 15-21 - \$44,444 \$25,556 \$70,000 *Additional amount...

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