Final answer:
Splish Corporation with 11,200 shares of $100 par value, 8% cumulative preferred stock, will have dividends in arrears of $268,800 by December 31, 2025, calculated for three years of unpaid annual dividends.
Step-by-step explanation:
The question regards the calculation of dividends in arrears for preferred stockholders of Splish Corporation, which is a matter of corporate finance within the broader business category. According to the details provided, Splish Corporation has 11,200 shares of $100 par value, 8%, cumulative preferred stock, and the dividends have not been paid since December 31, 2022. To find the dividends in arrears on December 31, 2025, three years of unpaid dividends need to be accounted for.
The annual dividend per share for preferred stock is calculated as the product of the par value and the dividend rate, which is 8%. This results in $8 (8% of $100) per share annually. Given that there are 11,200 shares of preferred stock, the annual preferred dividend payment would be $89,600 (11,200 shares multiplied by $8 per share).
If dividends were last paid on December 31, 2022, and considering that dividends are paid annually, there will be three years of unpaid dividends by December 31, 2025 (for the years 2023, 2024, and 2025). Therefore, the dividends in arrears would be $268,800 (3 years multiplied by $89,600 annual dividends).