Reference no: EM13535187

Dividing cash dividends between preferred and common stock

Precious Metal Trust has the following stockholders' equity:

Paid-in capital:
Preferred stock, 5%, $15 par, 7,000 shares authorized, 5,500 shares issued	$ 82,500
Common stock, $0.30 par, 1,200,000 shares authorized and issued	360,000
Paid-in capital in excess of par-common	400,000
Total paid-in capital	$ 842,500
Retained earnings	260,000
Total stockholders' equity	$1,102,500

Requirements

1. Is Precious Metal's preferred stock cumulative or noncumulative? How can you tell?

2. Precious Metal declares cash dividends of $25,000 for 2010. How much of the dividends goes to preferred? How much goes to common?

3. Precious Metal passed the preferred dividend in 2011 and 2012. In 2013 the company declares cash dividends of $35,000. How much of the dividend goes to preferred? How much goes to common?