Can you help me get started with this assignment?
A company has the following outstanding stock at the end of both 20X7 and 20X8
- Preferred stock (6%, $100 par value, 1000 shares issued and outstanding)
- Common stock ($1 par value, 200,000 shares issued and outstanding)
No dividends were declared or paid 20X7
Question 1: If the company's preferred stock is NON CUMULATIVE and the 20X8 dividend declared amounts to a total of $20,000, how much will go to PREFERRED stock holders?
A) 6000
B) 8000
C) 12000
D) 14000
E) 20000
Question 2: If the company's preferred stock is CUMULATIVE and 20X7 dividends are the only dividends in arrears, what portion of the 20X8 dividend declaration of $20,000 will go to the COMMON stock holders?
a) 6000
b) 8000
c) 12000
d) 14000
e) 20000