Question

From this information, compute answers to the following questions. a. How many shares of preferred stock have been issued? b. What is the total amount of the annual dividends paid to preferred stockholders? The year-end balance sheet of Ft. Smith Products includes the following stockholders’ equity section

Answer 1

Answer: a. 150,000 shares

b.$1,050,000

Step-by-step explanation:

a. Number of preferred shares issued =
`(Total value of preferred shares)/(par value)`

Total value of preferred shares = $15,000,000

Par value = $100

Number of preferred shares issued = tex]\frac{$15,000,000}{$100}[/tex]

=150,000

b. Total amount of annual dividends paid to preferred stockholders

The percentage of annual dividends is already indicated as 7% of the par value.

Annual dividend paid per each preferred share =
`(7)/(100)` $100

= $7

Total amount of annual dividends paid to preferred stockholders = $7 X 150,000 shares = $1,050,000