The X Company has the following stock outstanding: 6% Preferred stock, $100 par value, cumulative Common stock, $50 par value $300,000 $600,000
Preferred stock dividends are in arrears for 2004 and 2005. If the company declares and pays $64,000 in dividends in 2006, the amount received by the preferred stockholders would be
A) $36,000.
B) $18,000.
C) $54,000.
D) $64,000.
*can I please can an explanation of how you got the answer, it would be very helpful*
Preferred Dividend = 300000*6% = 18000
Dividend paid to preferred shareholders = Preferred dividend *No of years (2004 to 2006)
= 18000*3
Dividend paid to preferred shareholders = 54000
So answer is c) $54000
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