Question

Lafayette, Inc. was incorporated on January 1, 2014. Lafayette issued 15,000 shares of common stock and 800 shares of preferred stock on that date. The preferred stock is cumulative, $100 par, with an 12% dividend rate. Lafayette has not paid any dividends yet. In 2017, Lafayette had its first profitable year, and on November 1, 2017, Lafayette declared a total dividend of $44,000. What is the total amount that will be paid to common stockholders

Answer 1

$5,600

Step-by-step explanation:

Calculation to determine the total amount that will be paid to common stockholders?

Total amount paid to common stockholders=$44,000-[(800 (12%)($100)*4]

Total amount paid to common stockholders=$44,000-($9,600*4 )

Total amount paid to common stockholders=$44,000-$38,400

Total amount paid to common stockholders=$5,600

(2014-2017=4)

Therefore the total amount that will be paid to common stockholders is $5,600