Question

The charter of a corporation provides for the issuance of 95,794 shares of common stock. Assume that 41,563 shares were originally issued and 3,342 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2-per-share dividend is declared?

Answer 1

The amount of cash dividends to be paid is $76,442

Step-by-step explanation:

Dividend: The dividend is the amount that is paid to the equity and preference shareholders in proportionate of their invested amount.

The computation of cash dividend which is to be paid is shown below:

= (Issued shares - reacquired shares) × dividend per share

= (41,563 shares - 3,342 shares) × $2 per share

= $38,221 × $2 per share

= $76,442

The dividend amount should always be paid on the outstanding shares which come by subtracting the reacquired shares from the issued shares.