Question

Outstanding stock of the West Corporation included 40,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par non-cumulative preferred stock. In 2018, West declared and paid dividends of $4,000. In 2019, West declared and paid dividends of $12,000. How much of the 2019 dividend was distributed to preferred shareholders

Answer 1

$6,000

Step-by-step explanation:

Calculation to determine How much of the 2019 dividend was distributed to preferred shareholders

Dividend distributed to preferred shareholders=Shares of 6%, $10 par non-cumulative preferred stock

Let plug in the formula

Dividend distributed to preferred shareholders=(10,000 ×$10) × .06

Dividend distributed to preferred shareholders = $6,000

Therefore How much of the 2019 dividend was distributed to preferred shareholders will be $6,000