Question

Given: 24,000 shares cumulative preferred stock ( $4.5 dividend per share); 48,000 shares common stock. Dividends paid: 2021 , $9,600;2022,0; and 2023,$340,000. How much will the preferred and the common stockholders receive each year? Note: Leave no cells blank - be certain to enter "0" wherever required.

Answer 1

The preferred stockholders will receive $108,000 each year. The common stockholders will receive $9,600 in 2021, $0 in 2022, and $340,000 in 2023.

Step-by-step explanation:

To find out how much the preferred and common stockholders will receive each year, we need to calculate the dividends for each class of stock.

1. Preferred stock dividends: $4.5 per share multiplied by the number of preferred shares (24,000). This gives us a total of $108,000 for the preferred stockholders.
2. Common stock dividends: The remaining profits after paying the preferred stock dividends will be distributed among the common stockholders. In 2021, the dividends paid were $9,600 and in 2023, $340,000. To calculate the dividend for 2022, we subtract the dividends paid in 2021 and 2023 from the total profits. So, the dividend for 2022 is $0. Therefore, the common stockholders will receive $9,600 in 2021, $0 in 2022, and $340,000 in 2023.

Answer 2

Preferred stockholders will receive $108,000 each year

The common stockholders will receive $0 in 2021, $108,000 in 2022, and $572,000 in 2023.

The preferred stock dividends for each year:

2021:

= 24,000 shares x $4.5 dividend per share = $108,000

2022:

= 24,000 shares x $4.5 dividend per share = $108,000

2023:

= 24,000 shares x $4.5 dividend per share = $108,000

The given total dividends paid to preferred stockholders:

• - 2021: $9,600
• - 2022: $0
• - 2023: $340,000

Allocating dividends to preferred stockholders, we have

2021:

= $9,600 (paid) + $98,400 (remaining) = $108,000

2022:

$0 (no payment as no remaining dividends from previous year) + $108,000 (remaining) = $108,000

2023:

= $108,000 (paid) + $232,000 (remaining) = $340,000

The dividends for common stockholders:

2021 = $0 (remaining after paying preferred) + $0 (total dividends paid) = $0

2022 = $108,000 (remaining after paying preferred) + $0 (total dividends paid) = $108,000

2023 = $232,000 (remaining after paying preferred) + $340,000 (total dividends paid) = $572,000