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alexander's athletic apparel has 1,100 shares of 5%, $100 par value preferred stock the company issued at the beginning of 2023. all remaining shares are common stock. the company was not able to pay dividends in 2023, but plans to pay dividends of $13,000 in 2024. required: 1. & 2. how much of the $13,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2024, assuming the preferred stock is cumulative? what if the preferred stock were noncumulative?

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anthougo

a) If the preferred stock is cumulative, the dividends for 2024 paid to preferred and common stockholders are:

  • Preferred - $11,000
  • Common - $2,000.

b) If the preferred stock is noncumulative, the dividends for 2024 paid to preferred and common stockholders are:

  • Preferred - $5,500
  • Common - $7,500.

What are cumulative and noncumulative preferred dividends?

Cumulative preferred stock attracts cumulative dividends.  Any year when dividends are not declared, the dividends payable account records a liability that must be paid in any year when sufficient dividends are declared.

For noncumulative preferred stock, dividends are not accumulated or paid to preferred stockholders when dividends are not declared.

1,100 shares of 5% Preferred stock at $100 par value = $110,000 (1,100 x $100)

Dividends declared in 2024 = $13,000

Annual Preferred stock dividends = $5,500 ($110,000 x 5%)

Dividends for preferred stockholders in 2024 if preferred stock is cumulative = $11,000 ($5,500 x 2)

Common stock dividends = $2,000 ($13,000 - $11,000)

Dividends for preferred stockholders in 2024 if preferred stock is noncumulative = $5,500

Common stock dividends = $7,500 ($13,000 - $5,500)

Learn more about cumulative and noncumulative preferred stock at https://brainly.com/question/29855329

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