ACCOUNTING
E 18-10 Effect of cumulative, nonparticipating preferred stock on dividends—3 years
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—2011, 2012, and 2013, respectively.
Common stock 100
Paid in capital excess of par, common 980
Preferred stock, 8% 200
Paid in capital excess of par, preferred 555
Required:
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.
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