Question

​Electric, Inc. was incorporated on January​ 1, 2016. Electric issued​ 4,000 shares of common stock and​ 1,200 shares of preferred stock on that date. The preferred stock is​ cumulative, $100​ par, with an​ 12% dividend rate. Electric has not paid any dividends yet. In​ 2019, Electric had its first profitable​ year, and on November​ 1, 2019, Electric declared a total dividend of​ $63,000. What is the total amount that will be paid to preferred​ shareholders?

Answer 1

$57,600

Step-by-step explanation:

The computation of the total amount paid to preferred shareholders are shown below:

= Number of shares for preferred stock × par value × dividend rate × number of years

= 1,200 shares × $100 × 12% × 4 years

= $57,600

In case of cumulative, the number of years would be four years for dividend paid

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