Ask Question
20 August, 14:33

ABC Company's outstanding stock consists of 1,900 shares of noncumulative 5% preferred stock with a $100 par value and 11,900 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividend Declared year 1 $ 3,900 year 2 $ 9,800 year 3 $ 41,500 The total amount of dividends paid to preferred and common shareholders over the three-year period is:

+1
Answers (1)
  1. 20 August, 17:58
    0
    Preferred dividends paid = $22,900

    Common dividends paid = $32,300

    Explanation:

    As per the data given in the question,

    Total value of preferred shares = 1,900 * $100

    = $190,000

    Annual preferred dividend = $190,000 * 5%

    = $9,500

    Until $9,500 is not paid in dividends to the preferred shareholders, dividends will not be paid to the common stockholders.

    The preferred stock is non-cumulative which indicates, in any year if no preferred dividends are paid or preferred dividends of less than $9,600 is paid in any year, the balance of preferred dividends will not be carried to next year.

    So,

    Preferred dividends paid = $3,900 + $9,500 + $9,500

    = $22,900

    Common dividends paid = ($3900 + $9,800 + $41,500) - $22,900

    = $32,300
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “ABC Company's outstanding stock consists of 1,900 shares of noncumulative 5% preferred stock with a $100 par value and 11,900 shares of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers