Question

Texas Inc. has 11,000 shares of 6%, $125 par value cumulative preferred stock and 88,000 shares of $1 par value common stock outstanding at December 31. What is the annual dividend on the preferred stock?

Answer 1

$75,000.

Step-by-step explanation:

The computation of the annual dividend on the preferred stock is shown below:

Annual dividend on the preferred stock = Total preferred stock × dividend percentage

where,

Total preferred stock = 10,000 shares × $125 = $1,250,000

And, Annual dividend = 1250,000 × 6% = $75,000

Therefore the total annual dividend on preference stock is $75,000.