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The records of Hoffman Company reflected the following balances in the stockholders equity accounts at...

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Accounting

The records of Hoffman Company reflected the following balances in the stockholders equity accounts at December 31, 2018:

Common stock, par $12 per share, 49,500 shares outstanding. Preferred stock, 8 percent, par $18.5 per share, 7,810 shares outstanding. Retained earnings, $239,000. On January 1, 2019, the board of directors was considering the distribution of a $63,900 cash dividend. No dividends were paid during 2017 and 2018.

Required:

Determine the total and per-share amounts that would be paid to the common stockholders and to the preferred stockholders under two independent assumptions: The preferred stock is noncumulative. The preferred stock is cumulative. Why were the dividends per share of common stock less for the cumulative preferred stock than the noncumulative preferred stock? What factors would cause a more favorable dividend for the common stockholders?

8.5.2

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