a. Herr has 3,000 shares of 7%, $100 preferred stock outstanding at December 31, 2020. At December 31, 2020, the company declared a $105,000 cash Determine the paid to preferred stockholders and common stockholders under each of the following scenarios.
1. The preferred stock is noncumulative, and the company has not missed any dividends in previous years.
2. The preferred stock is noncumulative, and the company did not pay a in each of the two previous years.
3. The preferred stock is cumulative, and the company did not pay a in each of the two previous years.
b. Jurgens Company has had 4 years of net income. Due to this success, the market price of its 400,000 shares of $3 has increased from $12 per share to $46. During this period, paid-in capital remained the same at $4,800,000. Retained earnings increased from $1,800,000 to $12,000,000. President E. Rife is considering either a 15% stock or a 2-for-1 stock split. He asks you to show the before-andafter effects of each option on
(a) Retained earnings.
(b) Total stockholders’ equity.
