Question

Sweet Company’s outstanding stock consists of 1,600 shares of cumulative 4% preferred stock with a $100 par value and 11,600 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $ 3,600 Year 2 $ 7,600 Year 3 $ 40,000 The total amount of dividends paid to preferred and common shareholders over the three-year period is:

Answer 1

The total amount of dividends paid to preferred and common shareholders over the three-year period is $51,200. This is calculated by adding the dividends declared and paid in each year: $3,600 + $7,600 + $40,000 = $51,200.

Answer 2

The total amount of dividends paid to preferred and common shareholders over the three-year period is $19,200.

Step-by-step explanation:

The total amount of dividends paid to preferred and common shareholders over the three-year period can be calculated by multiplying the number of shares of each type of stock by the dividend rate for each year, and then summing the results. Here is how you can calculate it:

Preferred Stock Dividends:

Year 1: 1,600 shares * $100 par value * 4% dividend rate = $6,400

Year 2: 1,600 shares * $100 par value * 4% dividend rate = $6,400

Year 3: 1,600 shares * $100 par value * 4% dividend rate = $6,400

Total Preferred Stock Dividends: $6,400 + $6,400 + $6,400 = $19,200

Common Stock Dividends:

Year 1: 11,600 shares * $10 par value * 0% dividend rate = $0 (no dividends declared or paid)

Year 2: 11,600 shares * $10 par value * 0% dividend rate = $0 (no dividends declared or paid)

Year 3: 11,600 shares * $10 par value * 0% dividend rate = $0 (no dividends declared or paid)

Total Common Stock Dividends: $0 + $0 + $0 = $0

Total Dividends Paid to Preferred and Common Shareholders: $19,200 + $0 = $19,200