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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