90.2K

Verified Solution

Link Copied!

Reporting and Interpreting Shareholders' Equity 651 11-6 AP11-4 Comparing Stock and Cash Dividends (P11-4) Ritz Company had the following shares outstanding and retained earnings at December 31,2018: Preferred shares, 8% (par value $25; outstanding, q,000 shares) Common shares (outstanding, 5,000 shares) Retained earnings $225,000 800,000 720,000 The board of directors is considering the distribution of a cash dividend to the two groups of shareholders. No dividends were declared during 2013 or 2017. Three independent cases are assumed Case A: The preferred shares are non-cumulative; the total amount of dividends is $25,000. Case B: The preferred shares are cumulative; the total amount of dividends is $36,000. Case C: Same as case B, except the amount is $77,500. Required: 1. Compute the amount of dividends, in total and per share, payable to each class of shareholders for each case. Show computations shares when the market value per share was $47. Complete the following comparative schedule for common shares only, including an explanation of the differences. 2. Assume that the company issued a 10 percent common stock dividend on the outstanding common Amount of Dollar Increase (Decrease) Stock Dividend Cash Dividend-Case C Item Assets Liabilities Shareholders' equity

Answer & Explanation Solved by verified expert

See Answer