Question

Assume the following shares outstanding: Preferred stock, 6%, $50 par value, cumulative, 1,000 shares with dividends in arrears 3 years, for 2012, 2013, and 2014. Common stock, $100 par value, 2,000 shares. Total dividends declared in 2015 were $50,000. The total amount of dividends to which common stockholders are entitled is

Answer 1

Dividend entitled to common stock : $ 38,000

Step-by-step explanation:

First, we calculatethe preferred stock dividend:

Dividend per year prefered stock:

1,000 sharesx $50 per share x 6% = 3,000

Second, the acumulated dividend for the previous years

acumulated dividends 2012 2013 2014

3 years x 3,000 = 9,000

Dividends 2015 $ 50,000

2015 Dividends $ 3,000

Acumulated dividends $ 9,000

Dividend entitled to common stock : $ 38,000