dividend allocations situation 1 akimoto company has the followi 245479

DIVIDEND ALLOCATIONS

Situation 1 Akimoto Company has the following stock outstanding:

Common Stock Preferred Stock

50,000 shares………………………..5,000 shares

$1 par value…………………………$40 par, $2 dividend

The amount available for dividends this year is $40,000. Prepare the dividend allocation between the preferred and common shares.

Situation 2 Benitez Company has the following stock outstanding:

Common Stock Preferred Stock

70,000 shares………………….Cumulative: 1,500 shares

$1 par value……………………$50 par, $2 dividend

…………………………………Noncumulative: 4,000 shares

…………………………………$50 par, $2 dividend

No dividends were declared in year 1 of operation. In year 2, there is $28,000 available for dividends. Prepare the dividend allocation between the preferred and common shares.

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