Question

topper corporation has 55,000 shares of $1 par value common stock and 32,000 shares of cumulative 5.6%, $100 par preferred stock outstanding. topper has not paid a dividend for the prior year. if topper declares a $1.20 per common share dividend this year, what will be the total amount they must pay their shareholders? multiple choice $245,200. $121,000. $66,000. $424,400.

Answer 1

To calculate the total amount Topper Corporation must pay to their shareholders, add the dividend payouts for the common stock and preferred stock. The total amount is $245,200.

Step-by-step explanation:

To calculate the total amount Topper Corporation must pay to their shareholders, we need to consider both the common stock and the preferred stock.

For the common stock, the total dividend payout is calculated by multiplying the dividend per share ($1.20) by the number of shares (55,000): $1.20 x 55,000 = $66,000.

For the preferred stock, the cumulative 5.6% dividend rate is applied to the preferred stock's par value of $100 per share. The total dividend payout for the preferred stock is calculated as follows: 32,000 x $100 x 5.6% = $179,200.

Therefore, the total amount Topper Corporation must pay their shareholders is $66,000 + $179,200 = $245,200.