Mary Co. paid dividends of $5,000, $6,200, and $8,000 during Year 1, Year 2, and Year 3, respectively. The company had 1,700 shares of 3.5%, $100 par value preferred stock outstanding that paid a cumulative dividend. The company also had 5,000 shares of $1 par value common stock outstanding. What is the total amount of dividends paid to common shareholders during Year 3

Question

Business

Hezekiah Peck

2 May, 15:48

Mary Co. paid dividends of $5,000, $6,200, and $8,000 during Year 1, Year 2, and Year 3, respectively. The company had 1,700 shares of 3.5%, $100 par value preferred stock outstanding that paid a cumulative dividend. The company also had 5,000 shares of $1 par value common stock outstanding. What is the total amount of dividends paid to common shareholders during Year 3

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Answers (1)

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Shyla Payne · Answer 1

Amount of dividend paid = $1,350

Explanation:

The computation is shown below:

As per the data given in the question,

Dividend per year for preferred stock = $1700 * $100 * 3.5%

= $5,950

Particulars Year 1 Year 2 Year 3

Preferred dividend $5,000 $6,200 $6,650

($700+$5,950)

Preferred dividend in arrears $950 $700

($5,950-$5,000) ($5,950+$950-$6,200)

Therefore dividends for common shareholders is

= $8,000 - $6,650

= $1,350