Problem:
The stockholders' equity section of Knott Corporation shows the following on December 31, 2007:
Preferred stock 6%, $100 par, 4,000 shares outstanding $ 400,000
Common stock $10 par, 60,000 shares outstanding 600,000
Paid-in capital in excess of par 200,000
Retained earnings 114,000
Total stockholders' equity $1,314,000
Instructions:
Assuming that all of the company's retained earnings are to be paid out in dividends on 12/31/07 and that preferred dividends were last paid on 12/31/05, show how much the preferred and common stockholders should receive if the preferred stock is cumulative and fully participating.