Question

Wok N Roll, Inc. began on January 1, 2017, by issuing 100,000 shares of $1 par value common stock and 1,000 shares of $100 par value, 5%, cumulative preferred stock. No dividends were declared in 2017 or 2018. In 2019, Wok N Roll declared and paid a $0.50 dividend to its common stockholders. Assuming all shares originally issued are outstanding, the total dividend declared and paid in 2019 equals ______.

Answer 1

$65,000

Step-by-step explanation:

The computations are shown below:

= Preference dividend + common dividend

where,

The computation of the preference stockholders dividend is shown below:

= Number of shares × dividend rate × per share value

= 1,000 shares × 5% × $100

= $5,000

So, for three years, the dividend would be

= $5,000 × 3 years

= $15,000

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

= Number of shares × dividend rate

= $100,000 × $.05

= $50,000

Now put these values to the above formula

So, the value would equal to

= $15,000 + $50,000

= $65,000