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Herr Corporation has 3,000 shares of 7%, $100 par value preferred stock outstanding at December 31, 2019. At December 31, 2019, the company declared a $105,000 cash dividend. Determine the dividend paid to preferred stockholders and common stockholders under each of the following scenarios.

The preferred stock is noncumulative, and the company has not missed any dividends in previous years.

1. The dividend paid to preferred stockholders ____________
2. The dividend paid to common stockholders _____________

1 Answer

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Answer and Explanation:

The computation is given below:

a. For preferred stockholders

= 3000 shares × $100 × 7%

= $21,000

b. For common stockholders

= $105,000 - $21,000

= $84,000

In this way it should be calculated

The same should be considered and relevant

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