Question

Manner, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and20,000 shares of $1 par value common stock outstanding at December 31, 2010. Therewere no dividends declared in 2009. The board of directors declares and pays a $45,000dividend in 2010. What is the amount of dividends received by the common stockholdersin 2010?a. $0b. $25,000c. $45,000d. $20,000

Answer 1

The amount of dividend is $20,000.

Step-by-step explanation:

Calculate the dividend on common stock using the equation as follows:

Dividend = Dividend Declared - (Number of Preferred shares * parvalue)*5%

=$45,000−(5,000×$100×5%)

=$45,000−$25,000

=$20,000

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