Description
Exercise 18-18 (Algo) Effect of cumulative, nonparticipating preferred stock on dividends—3 years [LO18-7]
The shareholders’ equity of ILP Industries includes the items shown below. The board of directors of ILP declared cash dividends of $44 million, $80 million, and $270 million in its first three years of operation—2024, 2025, and 2026, respectively.
($ in millions)
Common stock $ 220
Paid-in capital—excess of par, common 1,100
Preferred stock, 8% 800
Paid-in capital—excess of par, preferred 675
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.
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 noncumulative and nonparticipating.
