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%,