B-14.05 Problem

B-14.05 Problem - During 20X6, the company returned to...

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B-14.05 Wiggins Corporation has 10,000,000 shares of $1 par value common stock outstanding. This stock was originally issued at $7 per share. The company also has 1,000,000 shares of $50, 4%, cumulative preferred stock outstanding. The preferred stock was originally issued at par. During 20X5, the company experienced a significant business interruption and was unable to pay any dividends. Prior to 20X5, the preferred shareholders had always received the expected dividend.
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Unformatted text preview: During 20X6, the company returned to profitability, and paid $7,000,000 in dividends. (a) How much is the company's legal capital, additional paid-in capital, and total paid-in capital? (b) What accounting/disclosure is needed relating to the dividends in arrears on the preferred stock as of the end of 20X5 (i.e., should a liability be established)? (c) How would the 20X6 dividends be divided between common and preferred stock?...
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