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Unformatted text preview: 009) 125,000 30,000 (for 2009) 20,000 75,000 (for 2010) 110,000 75,000 (for 2011) 35,000 99,000 75,000 (for 2012) 24,000 Common per Share $ 0 5.67 0.30 4.67 3.33 0.00 0.00 7.00 0.40 5.00 5.00 0.70 0.48 P12–6 a. The maximum cash dividend that Cotter Company could declare given its current financial position is $25,000. This amount represents the cash that the company currently has on hand. If the company wants to declare a larger cash dividend, it would either have to sell some of its assets or borrow cash, thereby changing its financial position. b. In most states a company can not legally declare a dividend that exceeds the balance in Retained Earnings. Since Cotter Company has a balance in Retained Earnings (after closing entries) of $288,000, this amount is the maximum amount that the company could legally declare as a stock dividend. To be considered an ordinary stock dividend, however, the stock dividend cannot exceed 20% to 25% of the common shares already outstanding. The company's common...
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This homework help was uploaded on 03/03/2014 for the course ACCT 5053 taught by Professor Staff during the Fall '08 term at Oklahoma State.

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