The Tarzan Company began business on 1/1/2016 when they issued the following; 1000 shares of 200 par...

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The Tarzan Companybegan business on 1/1/2016 when they issued the following;
1000 shares of 200 par 8% preferred stock for$200,000
100,000 shares of $3 par common stock for$500,000
In 2016 Tarzan reported incomeof $85,000
In 2017 Tarzan reported incomeof $40,000
Tarzan did not pay anydividends in 2016
In 2017 Tarzan paid a dividendof $68,000
Part 1: If the preferredstock is non-cumulative non-participating how is the $68,000dividend divided between common and preferred stockholders (totaldollars not per share)
What is Tarzan's earnings per share for 2016?
What was Tarzan's earnings per share for 2017?
Part 2: If the preferredstock is cumulative non-participating, how is the $68,000 dividenddivided between common and preferred stockholders (total dollarsnot per share)
What was Tarzan's earnings per share for 2016?
What was Tarzan's earnings per share for 2017?

Answer & Explanation Solved by verified expert

3.8 Ratings (554 Votes)

Part 1 Noncumulative preference shares Division of dividend between preferred stockholders and common stockholders Dividend declared in 2017 68000 Preferred stockholders portion 200000 x 8 16000 Common stockholders portion 68000 16000 52000 Calculation of earning per share 2016 See Answer

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The Tarzan Companybegan business on 1/1/2016 when they issued the following;
	1000 shares of 200 par 8% preferred stock for$200,000
	100,000 shares of $3 par common stock for$500,000

In 2016 Tarzan reported incomeof $85,000
In 2017 Tarzan reported incomeof $40,000

Tarzan did not pay anydividends in 2016
In 2017 Tarzan paid a dividendof $68,000

Part 1: If the preferredstock is non-cumulative non-participating how is the $68,000dividend divided between common and preferred stockholders (totaldollars not per share)
	What is Tarzan's earnings per share for 2016?
	What was Tarzan's earnings per share for 2017?

Part 2: If the preferredstock is cumulative non-participating, how is the $68,000 dividenddivided between common and preferred stockholders (total dollarsnot per share)
	What was Tarzan's earnings per share for 2016?
	What was Tarzan's earnings per share for 2017?