Ritz Company had the following stock outstanding and

Retained Earnings #2840

Ritz Company had the following stock outstanding and Retained Earnings at December 31,
2013:Common stock (par $1; outstanding, 500,000 shares) ........................ $500,000Preferred
stock, 8% (par $10; outstanding, 21,000 shares) .................... 210,000Retained earnings
..................................................................... 900,000On December 31, 2013, the board of
directors is considering the distribution of a cash dividend to the common and preferred
stockholders. No dividends were declared during 2011 or 2012.Three independent cases are
assumed:Case A: The preferred stock is noncumulative; the total amount of 2013 dividends
would be $30,000.Case B: The preferred stock is cumulative; the total amount of 2013
dividends would be $30,000. Dividends were not in arrears prior to 2011.Case C: Same as
Case B, except the amount is $75,000.Required:1. Compute the amount of dividends, in total
and per share, payable to each class of stockholders for each case. Show computations. Round
per-share amounts to two decimal places.2. Complete the following schedule, which compares
case C to a 100 percent stock dividend on the outstanding common shares when the stock
price was $50. Amount of Dollar Increase (Decrease)Item Case C (Cash Dividend) Stock
DividendAssets ........................ $ ................................... $Liabilities .................... $
................................... $Stockholders' Equity ...... $ ................................... $View Solution:
Ritz Company had the following stock outstanding and Retained Earnings

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