Question

Winston Corporation has 9,000 shares of 4​%, $10 par cumulative preferred stock and 47,000 shares of common stock outstanding. Winston declared no dividends in 2017 and had no dividends in arrears prior to 2017. In 2018​, WinstonWinston declares a total dividend of $54,000. How much of the dividends go to the common​ stockholders?

Answer 1

Total dividend for common​ stockholders = $46,800

Step-by-step explanation:

Given:

Number of Cumulative share = 9,000

Price of each share = $10

Dividend rate = 4% = 4/100 = 0.04

Cumulative number of year = 2

Total Declared dividend = $54,000

Computation of Total dividend for common​ stockholders:

Total dividend each year = Number of Cumulative share × Price of each share × Dividend rate × Cumulative number of year

Total dividend each year = 9,000 × $10 × 0.04 × 2

Total dividend each year = 7,200

Total dividend for common​ stockholders = Total Declared dividend - Total dividend each year

Total dividend for common​ stockholders = $54,000 - $7,200

Total dividend for common​ stockholders = $46,800