Question

Dehesa, Inc. has 8,000 shares of 5%, $15 par, cumulative preferred stock and 50,000 shares of $3 par common stock outstanding. No dividends were declared last year. However, the board of directors just declared a $34,000 dividend this year. What amount of the total dividend will be paid to common stockholders?

A. $34,000B. $22,000C. $28,000D. $12,000

Answer 1

B. $22,000

Step-by-step explanation:

For computing the preferred dividend, first we have to find out the yearly dividend which is shown below:

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

= 8,000 shares × $15 × 5%

= $6,000

In the previous year, the 6,000 dividend is declared

And, in the current year, $6000 dividend is also declared

Out of $34,000, the $12,000 will be paid to preference stockholders and the remaining $22,000 will be paid to equity stockholders