Question

Towson Corp., had 6,000 shares of $100 par, 4% cumulative preferred stock as of January 1, 2018. No additional shares of preferred stock were issued during fiscal years 2018 & 2019. Dividends were paid to common shareholders in 2017 but no shareholders were paid dividends in 2018. A total of $85,000 of dividends was paid in 2019. Use this information to determine the total dollar amount of dividends that was paid to common shareholders during fiscal year 2019.

Answer 1

Common Dividend paid in 2019 = $37,000

Step-by-step explanation:

Given:

Number of shares = 6,000

Rate = 4% = 0.04

Share price = $100

Computation of per year Dividend

Dividend = Number of shares × Share price × Rate

Dividend = 6,000 × $100 × 0.04 = $24,000 per year

Preferred dividend for 2 years = $24,000 × 2 = $48,000

Computation of Dividend paid in 2019:

Total Dividend paid = $85,000

Preferred dividend for 2 years = $24,000 × 2 = $48,000

Common Dividend paid in 2019 = $85,000 - $48,000

Common Dividend paid in 2019 = $37,000