Question

Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2018. There were no dividends declared in 2017. The board of directors declares and pays a $250,000 dividend in 2018. What is the amount of dividends received by the common stockholders in 2018? $0 $150,000 $250,000 $100,000

Answer 1

$100000

Step-by-step explanation:

Given: Total Dividend paid= $250000.

Preferred stock is 25000 shares of 6%, $100 par value.

First, lets calculate preferred stock.

Preferred stock=
`[25000* \$ 100* 6%]`

∴ Preferred stock= $150000

Now, calculating the amount of dividends received by common stockholder.

Dividend received by stockholder=
`(Total\ Dividend\ paid \ by \ company - preferred\ dividend)`

Common stockholder´s dividend= (
`(250000-150000)= \$ 100000`

∴ Common stockholder´s dividend is $100000.