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    © Dr. Chula King All Rights Received

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    Fred The Fish
    The document discusses the shareholders' equity of WBL Industries which includes common stock, preferred stock, and paid-in capital in excess of par value for both common and preferred stock. It also details the cash dividends declared in the company's first three years of operation and how those dividends were allocated between preferred and common shareholders based on the preferred stock being cumulative and nonparticipating.

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    © Dr. Chula King All Rights Received

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    Fred The Fish
    17 views1 page
    The document discusses the shareholders' equity of WBL Industries which includes common stock, preferred stock, and paid-in capital in excess of par value for both common and preferred stock. It also details the cash dividends declared in the company's first three years of operation and how those dividends were allocated between preferred and common shareholders based on the preferred stock being cumulative and nonparticipating.

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    Ex18_10

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    The document discusses the shareholders' equity of WBL Industries which includes common stock, preferred stock, and paid-in capital in excess of par value for both common and preferred stock. It also details the cash dividends declared in the company's first three years of operation and how those dividends were allocated between preferred and common shareholders based on the preferred stock being cumulative and nonparticipating.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    17 views1 page

    © Dr. Chula King All Rights Received

    Uploaded by

    Fred The Fish
    The document discusses the shareholders' equity of WBL Industries which includes common stock, preferred stock, and paid-in capital in excess of par value for both common and preferred stock. It also details the cash dividends declared in the company's first three years of operation and how those dividends were allocated between preferred and common shareholders based on the preferred stock being cumulative and nonparticipating.

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    Exercise 18-10

    The shareholders’ equity of WBL Industries includes the items shown


    below. The board of directors of WBL declared cash dividends of $8
    million, $20 million, and $150 million in its first three years of
    operation-2013, 2014 and 2015, respectively.
    ($ in millions)
    Common stock $100
    PIC in excess of par-C/S 980
    Preferred stock, 8% 200
    PIC in excess of par-P/S 555

    © Dr. Chula King
    All Rights Received

    Exercise 18-10 (continued)


    Determine the amount of dividends to be paid to preferred and common
    shareholders in each of the three years, assuming that the preferred stock is
    cumulative and nonparticipating.
    Cumulative means that the preferred shareholders are entitled to their dividend,
    which is 8% of par, or $16 million, before the common shareholders receive
    anything and in any year where the full amount of preferred dividends are
    anything,
    not paid, the amount not paid is due preferred shareholders in subsequent
    years before the common shareholders receive anything.
    Preferred Common Total
    2013 $ 8,000,000* -0- $ 8,000,000
    2014 $20,000,000** -0- $ 20,000,000
    2015 $20,000,000*** $130,000,000 $150,000,000
    Of the $16,000,000,
    *Of $16 000 000 P/S receive $8,000,000;
    $8 000 000; the remaining $8,000,000
    $8 000 000 is in
    arrears.
    **The P/S receive the current dividend of $16,000,000 plus $4,000,000 of the
    $8,000,000 in arrears from 2013. $4,000,000 remains in arrears.
    *** The P/S receive the current dividend of $16,000,000, plus the $4,000,000
    in arrears for the total of $20,000,000. The common shareholders receive the
    rest.
    © Dr. Chula King
    All Rights Received

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