Question

Racer Corporation's December 31, 2014 balance sheet showed the following:8% preferred stock, $20 par value, cumulative,40,000 shares authorized; 20,000 shares issued $ 400,000Common stock, $10 par value, 4,000,000 shares authorized;2,600,000 shares issued, 2,560,000 shares outstanding 26,000,000Paid-in capital in excess of par value - preferred stock 80,000Paid-in capital in excess of par value - common stock 36,000,000Retained earnings 10,200,000Treasury stock (30,000 shares) 840,000Racer declared and paid a $100,000 cash dividend on December 15, 2014. If the company's dividends in arrears prior to that date were $24,000, Racer's common stockholders receiveda. $76,000.b. $36,000.c. $44,000.d. no dividend.

Answer 1

c. $44,000

Step-by-step explanation:

The common stock dividends will bethe total dividends declared less the preferred stock dividends.

Preferred stock dividends for the current year:

20,000 shares x $20 x 8% = 32,000

arrears dividends 24,000

total preferred dividends: 56,000

Dividends declared: 100,000

Preferred stock dividends - 56,000

available for common stock 44,000