Question

Colson Inc. declared a $240,000 cash dividend. It currently has 9,000 shares of 7%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock.

How much cash will Colson distribute to the common stockholders?

a. $114,000.
b. $126,000.
c. $177,000.
d. None.

Answer 1

The correct answer is A114,000

Step-by-step explanation:

9,000×$100=900,000

900,000×7%=63,000

$240,000- (63,000×2) = $114,000