What is the average price at which each preferred share sold for? What is the average price at which…

Dividing dividends between preferred and common stock

NORTHERN COMMUNICATIONS Stockholders’ Equity

Paid-in Capital:

Preferred stock, 6%, $11 par, 150,000 shares authorized

20,000 shares issued and outstanding

$ 220,000

Common stock, $3 par, 575,000 shares authorized

400,000 shares issued and outstanding

1,200,000

Paid-in capital in excess of par—common

1,000,000

Total paid-in capital

2,420,000

Retained earnings

190,000

Total stockholders’ equity

$2,610,000

Requirements

1.First, determine whether preferred stock is cumulative or noncumulative.

2.Compute the amount of dividends to preferred and to common for 2011 and 2012 if total dividends are $12,200 in 2011 and $55,000 in 2012.

3.What is the average price at which each preferred share sold for? What is the average price at which each common share sold for?