Oriole Corporation has outstanding 50,000 shares of $50 par value, 5% preferred stock and 346,000 shares of $1 par value common stock. The preferred stock was issued in July 2017, and no dividends were declared in 2017 or 2018. In 2019, Oriole declares a cash dividend of $462,000. How will the dividend be shared by common and preferred stockholders if the preferred is noncumulative

(a) noncumulative

Preferred share:  $120,000

Common share: $180,000

(b) cumulative

Preferred share:  $123,600

Common share: $176,400

Preferred stock outstanding = 10,000 shares * $100 par value = $1,000,000

(a) if the preferred stock interest is noncumulative, the the total dividend paid of 2 years = preferred stock outstanding x rate x 2 years

= $1,000,000 * 6% * 2 = $120,000

Dividend for common stock = total cash dividend - dividend for preferred stock = $300,000 - $120,000 = $180,000

(b) if the preferred stock interest is noncumulative, the the total dividend paid of 2 years = preferred stock outstanding * (1+ rate)^2 - preferred stock outstanding

= $1,000,000*(1+6%)^2 - $1,000,000 = $123,600

Dividend for common stock = $300,000 - $123,600 = $176,400

Explanation:

answer(eu) is the correct answer;