Question

Marigold Corp. has outstanding 77000 shares of 5% preferred stock with a $10 par value and 145600 shares of $3 par value common stock. Dividends have been paid every year except last year and the current year. If the preferred stock is cumulative and nonparticipating and $252900 is distributed, the common stockholders will receive _________.

Answer 1

$ 175,900.00

Step-by-step explanation:

Yearly preferred stock dividends=number of preferred shares*dividend percentage*par value

yearly preferred stock dividends=77,000*5%*$10=$ 38,500.00

Since preferred stock is cumulative it implies that dividends in arrears for last year must be paid alongside this year dividends

dividends to preferred stock=$ 38,500*2=$77,000.00

common stockholders' dividends=total dividends-preferred stock dividends=$252,900-$77,000=$ 175,900.00