Question

Sunland, Inc. has 3600 shares of 5%, $50 par value, cumulative preferred stock and 72000 shares of $1 par value common stock outstanding at December 31, 2019, and December 31, 2018. The board of directors declared and paid a $3100 dividend in 2019. In 2020, $17000 of dividends are declared and paid. What are the dividends received by the preferred and common shareholders in 2020?

Answer 1

$15,000 and $17,000

Step-by-step explanation:

The computation is shown below:

But before that we have to determine the total dividend of preference stock i.e

= 3,600 shares × 5% × 50%

= $9,000

Now the 3,100 is paid, so the remaining amount is

= $9,100 - $3,100

= $6,000

So the total dividend paid to preference shareholders is

= $9,000 + $6,000

= $15,000

And for common shareholders, it is

= $17,000 - $15,000

= $2,000