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Snacksters Corp. paid a total of $60,000 in dividends for the year. The corporation currently had...

Snacksters Corp. paid a total of $60,000 in dividends for the year. The corporation currently had 10,000shares of $5 par value common stock issued and 5,000 of $5 cumulative preferred stock with a $100 parvalue. The corporation has paid dividends in all of the previous years. How much will each common andpreferred shareholder receive?

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Answer #1

Total dividend = $ 60,000.

Fixed cumulative preferred dividend = 5,000 x $ 5 per share.

Fixed cumulative preferred dividend = $ 25,000.

So out of $ 60,000 dividend amount, $ 25,000 is first given to preferred shares and balance $ 35,000 to common shareholders.

Common shareholders = $ 35,000.

Dividend per share = $ 3.50 per share.

Cumulative preference shares = $ 25,000.

Dividend per share = $ 5 per share.

SUMMARY:

Total dividend given to common shareholders is $ 35,000 and for cumulative preference shares is $ 25,000. S

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