Question

Day Inc. has 4,089 shares of 5%, $100 par value cumulative preferred stock and 94,145 shares of $1 par value common stock outstanding at December 31. What is the annual dividend on the preferred stock?

Select the correct answer.

$20,445 in total

$4,707 in total

$4,089 in total

$50.00 per share

Answer 1

$20,445 in total

Step-by-step explanation:

The computation of the annual dividend is shown below:

= Number of shares of cumulative preferred stock × dividend rate × par value per share

= 4,089 shares × 5% × $100

= $20,445

Simply we multiplied the number of shares of cumulative preferred stock with the dividend rate and the par value per share so that the exact amount will arrive.