Question

Sun Inc. has 5,000 shares of 6%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2007.

What is the annual dividend on the preferred stock?a. $60 per shareb. $30,000 in totalc. $3,000 in totald. $0.60 per share

Answer 1

b. $30,000 in total

Step-by-step explanation:

The computation of the annual dividend on the preferred stock is shown below:

= Number of shares × par value of share × dividend rate

= 5,000 shares × $100 × 6%

= $30,000

Simply we multiply the total value of the shares with the dividend rate given for the preference stockholders so that the annual dividend can computed

All other information which is given is not relevant. Hence, ignored it