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16 February, 14:22

The shareholders' equity of Green Corporation includes $386,000 of $1 par common stock and $570,000 par of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $67,000 in 2018 after paying $37,000 cash dividends in each of 2017 and 2016. What is the amount of dividends common shareholders will receive in 2018?

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  1. 16 February, 15:26
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    The amount of dividends common shareholders will receive in 2018 is $21,300

    Explanation:

    The computation of amount of dividend of common shareholders is shown below:

    Previous year stock dividend (2017 & 2016) = ($570,000 * 7%) - 37000 * 2

    = $5800

    Current year stock dividend 2017 = $570,000 * 7% = $39900

    Current year cash dividend 2018 = $67,000

    Now, subtract the 20178 stock dividend and previous year stock dividend from Current year cash dividend 2018 which equals to $21,300

    = $67,000 - $39900 - $5800

    = $21,300

    Thus, the amount of dividends common shareholders will receive in 2018 is $21,300
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