Question 41
Macintyre, Inc., has outstanding 10,000 shares of $50 par value,
6% nonparticipating, cumulative preferred stock and 16,000 shares
of $10 par value common stock.
If the dividend on preferred stock is two years in arrears, and the
total cash dividend declared this year is $170,000, then the total
amounts distributed to preferred and common stockholders,
respectively, are:
A. |
$90,000 and $80,000 |
|
B. |
$60,000 and $110,000 |
|
C. |
$54,000 and $116,000 |
|
D. |
$27,000 and $143,000 |
Dividends Per year for the 6% nonparticipating, cumulative preferred stock = $ 50 * 10,000 Shares * 6%
= $ 30,000
Dividends in Arrears for the 6% nonparticipating, cumulative preferred stock = $ 30,000 *2
= $ 60,000
Total Dividends to be paid to the 6% nonparticipating, cumulative preferred stock = Dividends in Arrears for the 6% nonparticipating, cumulative preferred stock + Current Years Dividends for the 6% nonparticipating, cumulative preferred stock
= $ 60,000 + $ 30,000
= $ 90,000
Dividends to common stockholders = Total Dividends Paid this Year - Total Dividends to be paid to the 6% nonparticipating, cumulative preferred stock
= $ 170,000 - $ 90,000
= $ 80,000
Hence the correct answer is :
A. $ 90,000 and $ 80,000
Amount of Dividend on Preferred Shares = 10,000 Shares * $ 50 * 6%
= $ 30,000
Amount of Dividend in Arrears = Amount of Dividend * 2
= $ 30,000 * 2
= $ 60,000
Dividend to be paid this year = Amount of Dividend for Current Year+ Amount of Dividend in Arrears
= $ 30,000 + $ 60,000
= $ 90,000
total amounts distributed to common stockholders = Total Dividends Declared - Dividend to be paid this year
= $ 170,000 - $ 90,000
= $ 80,000
Hence the correct answer is A. $90,000 and $80,000
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