Question

Green Planet Corp. has (a) 5,000 shares of noncumulative 10% preferred stock with a $2 par value and (b) 17,000 shares of common stock with a $0.01 par value. During its first two years of operation, Green Planet declared and paid the following total cash dividends. Compute the dividends paid each year to each of the two classes of stockholders: preferred and common.
  

Year 1 total cash dividends	$	800
Year 2 total cash dividends	$	1,700

Answer 1

Annual dividend on preferred stock = Number of preferred shares x Par value per preferred share x Dividend rate

= 5,000 x 2 x 10%

= $1,000

Dividend distribution table

	Dividend paid to preferred stockholder's	Dividend paid to common stockholder's
Year 1	800	0
Year 2	1,000	700

First, dividend of $1,000 will be paid to preferred stockholder's and then remaining dividend will be paid to common stockholder's.

kindly give a positive rating if you are satisfied with the solution. Please ask if you have any query related to the question, Thanks.