Question

Saturn Corporation has 13,000 shares of 14​%, $ 81 par noncumulative preferred stock outstanding and 26,000 shares of nominuspar common stock outstanding. At the end of the current​ year, the corporation declares a dividend of $ 197,000. How is the dividend allocated between preferred and common​ stockholders?

Answer 1

The dividend allocated between preferred and common​ stockholders is $147,420 and $49,580 respectively

Step-by-step explanation:

We know that the total dividend amount declares is $197,000 out of which first preference stockholders will get the dividend and afterwards equity stockholders will give.

The computation of the preference stockholders dividend is shown below:

= Number of shares × dividend rate × per share value

= 13,000 shares × 14% × $81

= $147,420

And, the total dividend declared is $197,000

So, for the common​ stockholders, the dividend would be

= $197,000 - $147,420

= $49,580

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