Final answer:
The preferred stockholders will first receive $18,000 for three years' dividends in arrears. After clearing the arrears, $6,000 will be paid for the current year's dividends to preferred stockholders, making a total of $24,000 that preferred stockholders receive from the $100,000 dividend.
Step-by-step explanation:
The preferred stockholders of the company will receive the amount corresponding to cumulative dividends that are in arrears before any dividends are paid to common stockholders.
Since the preferred stock is cumulative and three years' dividends are in arrears, we first need to calculate the total dividends owed to preferred stockholders for those arrears. Preferred stock has a 6% dividend on a $5 par value, which equates to $0.30 per share annually. With 20,000 shares outstanding, the annual dividend is $0.30 x 20,000 shares = $6,000. For three years, this totals $6,000 x 3 years = $18,000.
Now, the company pays a $100,000 dividend. The preferred stockholders must be paid their arrears of $18,000 first. If there is any dividend remaining after paying the arrears, it would be distributed based on the current year's dividends and then to common stockholders if anything is left. Since the total dividend paid is $100,000 and the arrears are $18,000, this leaves $100,000 - $18,000 = $82,000 to be distributed for the current year's dividends and to common stockholders if possible. The preferred stock's current year dividend would be another $6,000. After paying the arrears and the current year's preferred dividends ($18,000 + $6,000 = $24,000), the remaining $100,000 - $24,000 = $76,000 would be available for the common stockholders.