Reference no: EM132874339
Question - Common and preferred stock- issuances and dividends: Permabilt Corp. was incorporated on January 1, 2016, and issued the following stock for cash:
4,000,000 shares of no-par common stock were authorized; 1,750,000 shares were issued on January 1, 2016, at $45 per share.
1,800,000 shares of $100 par value, 7.5% cumulative, perferred stock were authorized, and 840,000 shares were issued on January 1, 2016, at $105 per share.
Net income for the years ended December 31, 2016, 2017, and 2018 was $38,000,000, $46,000,000, and $57,000,000, respectively.
No dividends were declared of paid during 2016 or 2017. However, on December 17, 2018, the board of directors of Permabilt Corp. declared dividends of $64,000,000, payable on February 9, 2019, to holders of record as of January 4, 2019.
Required -
A) Use the horizontal model to show the effects of:
-The issuance of common stock and preferred stock on January 1, 2016.
-The declaration of dividends on December 17, 2018.
-The payment of dividends on February 9, 2019.B) Of the total amount of dividends declared during 2018, how much will be received by preferred shareholders?