The equity section of a balance sheet at December 31, 2021 is provided below:
5% Preferred Stock, $10 par, 2,000 shares issued and outstanding$ 20,000
Common Stock, $1 par, 10,000 shares issued and outstanding10,000
Paid-in Capital in Excess of Par--Common Stock 12,500
Total Capital Stock42,500
Retained Earnings 74,500
Total Stockholders' Equity$117,000
No dividends were paid during 2019 and 2020, but the company plans to issue a cash dividend of $2,000 on December 31, 2021. Determine the total dividend for each class of stock under each of the following assumptions:
A)The preferred stock is noncumulative and nonparticipating. B)The preferred stock is cumulative and nonparticipating.
What will be an ideal response?
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