Question

The shareholders' equity of Green Corporation includes $398,000 of $1 par common stock and $580,000 par of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $68,000 in 2018 after paying $38,000 cash dividends in each of 2017 and 2016. What is the amount of dividends common shareholders will receive in 2018

Answer 1

$22,200

Step-by-step explanation:

The computation of the dividend amount made to the common shareholders is shown below:

Arrear in Preferred Stock Dividend is

= $580,000 × 7% × 2 - $38,000 - $38,000

= $5,200

Now

Current Preferred Stock Dividend is

= $580,000 × 7%

= $40,600

Now

The amount of dividends made to the common shareholders is

= $68,000 - $40,600 - $5,200

= $22,200