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Question 5. 5. (TCO F) In each of the following independent cases, it is
assumed that the corporation has $400,000 of 6% preferred stock and
$1,600,000 of common stock outstanding, each having a par value of
$10. No dividends have been declared for 2009 and 2010.
(a) As of 12/31/11, it is desired to distribute $250,000 in dividends. How
much will the preferred stockholders receive if their stock is cumulative
and nonparticipating?
(b) As of 12/31/11, it is desired to distribute $400,000 in dividends. How
much will the preferred stockholders receive if their stock is cumulative
and participating up to 11% in total?
(c) On 12/31/11, the preferred stockholders received a $120,000
dividend on their stock, which is cumulative and fully participating.
How much money was distributed in total for dividends during 2011?
(Points : 30)
Question 6. 6. (TCO A) At December 31, 2010, Kifer Company had
500,000 shares of common stock outstanding. On October 1, 2011, an
additional 100,000 shares of common stock were issued. In addition,
Kifer had $10,000,000 of 6% convertible bonds outstanding at
December 31, 2010, which are convertible into 225,000 shares of
common stock. No bonds were converted into common stock in 2011.
The net income for the year ended December 31, 2011, was $3,000,000.
Assuming the income tax rate was 30%, what would be the diluted
earnings per share for the year ended December 31, 2011 (rounded to the
nearest penny)? Show all computations. (Points : 25)