The board of directors of Picasso Manufacturing, Inc., may declare a dividend this year but has not declared a dividend for the past two years. The corporation has 800,000 shares of $1 par value common stock authorized and 200,000 shares issued and outstanding. It also has 40,000 shares of 5 percent, $10 par value cumulative preferred stock authorized, of which 40,000 shares are issued and outstanding.
Compute the amount of dividends available for common and preferred shareholders if the dividend declaration is $80,000.
The board of directors of Newton Industries is contemplating a dividend of $500,000. The corporation had 60,000 shares of 10 percent, $40 par value cumulative preferred stock outstanding. There were 400,000 shares of $1 par value common stock outstanding at the time Newton declared dividends.
Determine the dividends the preferred and common shareholders will receive if the preferred stock is one year in arrears.
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