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9 February, 12:13

Topper Corporation has 60,000 shares of $1 par value common stock and 16,000 shares of cumulative 7%, $100 par preferred stock outstanding. Topper has not paid a dividend for the prior year. If Topper declares a $1.95 per share dividend this year, what will be the total amount they must pay their shareholders? A. $117,000. B. $341,000. C. $327,000. D. $177,000.

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  1. 9 February, 15:55
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    so correct option is B. $341,000

    Explanation:

    given data

    shares = 60,000

    common stock = $1 par value

    shares = 16,000

    rate 7%

    stock outstanding = $100 par preferred

    dividend = $1.95 per share

    solution

    we know that when preferred stock is cumulative than there pay last year prefer dividend in this year with addition of dividend this year

    so here

    Preferred dividend will be

    Preferred dividend = 16,000 shares * 7% * $100 par

    Preferred dividend = $112,000

    and

    he pay in preferred dividend = $112,000 + $112,000

    pay in preferred dividend = $224,000

    and

    he pay dividend to common stockholders is

    pay dividend to common stockholder = 60,000 * $1.95

    pay dividend to common stockholder = $117,000

    so that here total dividends payable will be

    total dividends payable = $224,000 + $117,000

    total dividends payable = $341,000

    so correct option is B. $341,000
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