A Corporation Had the Following Stock Outstanding When the Company's

question 141

Essay

A corporation had the following stock outstanding when the company's board of directors declared a $95,000 cash dividend during the current year:
$\begin{array}{|l|r|}\hline\text { Preferred stock, } \$ 100 \text { par, } 6 \%, 5,000 \text { shares issued } & \$ 500,000 \\\hline \text { Common stock, } \$ 10 \text { par, } 75,000 \text { shares issued } & \underline{750,000} \\\hline \text { Total } & \$ 1,250,000\\\hline\end{array}$
Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is cumulative and nonparticipating and dividends are one year in arrears.

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Definitions:

Private Placements

The act of presenting financial instruments to a limited group of chosen investors to gather funds.

Flotation Costs

Flotation costs refer to the expenses incurred by a company in issuing new securities, including fees for underwriting, legal counsel, and registration.

Public Offerings

The act of selling stocks or bonds to the public for the first time.

Debt Refunding

The process of replacing old debt with new debt, often to take advantage of more favorable borrowing terms or interest rates.