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Permabilt Corp. was incorporated on January 1, 2019, and issued the following stock for cash: 2,000,000...

Permabilt Corp. was incorporated on January 1, 2019, and issued the following stock for cash: 2,000,000 shares of no-par common stock were authorized; 750,000 shares were issued on January 1, 2019, at $35 per share. 800,000 shares of $100 par value, 7.5% cumulative, preferred stock were authorized; 540,000 shares were issued on January 1, 2019, at $105 per share. No dividends were declared or paid during 2019 or 2020. However, on December 22, 2021, the board of directors of Permabilt Corp. declared dividends of $15,000,000, payable on February 12, 2022, to holders of record as of January 8, 2022. b. Of the total amount of dividends declared during 2021, how much will be received by preferred shareholders?

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Answer #1
  • Requirement asked: requirement ‘B’
  • Annual Preferred stock dividend required to be paid (or accumulated) = 540000 preferred shares x $ 100 par x 7.5% = $ 4,050,000
  • Preferred stock in arrear for 2019 and 2020 = 4050000 + 4050000 = $ 8,100,000
  • Dividend received by preferred stockholder will include:
    Arrear dividend accumulated of 2019 and 2020, and
    Dividend for 2021

    = $ 8100000 + $ 540000 for 2021
    = $ 8,640,000
  • Dividend received by Preferred shareholders = $ 8,640,000
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