Question

As 2017, Buttle Corp. has $10 par, 2% preferred stock, 6,500 shares outstanding, and $1 par common stock with 32,000 shares outstanding. The preferred stock is cumulative and preferred stockholders last received a dividend in 2014. If the company wants to distribute $4 per share to the common stockholders in 2017, what is the total amount of dividends that the company must pay at the end of the current year

Answer 1

$131,900

Step-by-step explanation:

Th computation of the total amount of dividend is shown below:

dividend per year for preferred stock is

= (10 × 6500) × 2%

= $1300

Now the total dividend for preferred stock is

= ($1300 × 3)

= $3900

And, the Total common dividend is

= (4 × 32,000)

= $128,000

So, the total dividend to be paid is

= $3,900 + $128,000

= $131,900