Question

# Bramble Corp. has 11000 shares of 5%, \$100 par value, cumulative preferred stock and 22000 shares...

Bramble Corp. has 11000 shares of 5%, \$100 par value, cumulative preferred stock and 22000 shares of \$1 par value common stock outstanding at December 31, 2017. There were no dividends declared in 2015. The board of directors declares and pays a \$99000 dividend in 2016 and in 2017. What is the amount of dividends received by the common stockholders in 2017?

 \$33000.
 \$0.
 \$44000.
 \$5500

Dividends to be received by Preference Shareholders= 11000 Shares * \$ 100 * 5 %

= \$ 55,000

For 2015 Cumulative Dividend = \$ 55,000

In 2016 Dividend Paid = \$ 99,000

Out of \$ 99,000, 2015 Cumulative Dividend of \$ 55,000 is paid and \$ 44,000 for 2016 is paid.

For 2016 Cumulative Dividend = \$ 55,000 - 44,000

= \$ 11,000

In 2017 Dividend Paid = \$ 99,000

Dividend of 2016 Cumulative Dividend = \$ 11,000

Dividend to Preference Shareholders= \$ 55,000

Dividend to common stockholders = \$ 99,000 - \$ 11,000 -\$ 55,000

= \$ 33,000

Hence the correct answer is \$33000.

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