Ritz company had the following stock outstanding and, Ask an Expert

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Ritz Company had the following stock outstanding and Retained Earnings at December 31, 2013:

Common stock (par $1; outstanding, 500,000 shares)

500,000

Preferred stock, 8% (par $10; outstanding, 21,000 shares)

210,000

Retained earnings

900,000

On 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-a.	Compute the amount of dividends in total payable to each class of stockholders for each case.

1-b.	Compute the amount of dividends per share payable to each class of stockholders for each case. (Round your answers to 2 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. (Select "NE" if there is no effect.)

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