Question

Before a company can pay dividends to the common shareholders, the owners of cumulative preferred shares...

Before a company can pay dividends to the common shareholders, the owners of cumulative preferred shares must receive

Select one:

a. dividends in arrears, but not the current year's dividends

b. the current year's dividend, but not dividends in arrears

c. all dividends in arrears plus the current year's dividend

d. neither the current year's dividends nor dividends in arrears

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Option c

All dividend in arrears plus current year's dividend.

Being a cumulative preference share holder, he is having right to receive dividend in the future years if it is unpaid in the current year which is called as arrears of dividend which are to be cleared first and then with that particular fiscal year's dividend and finally to the common shareholders.

Cumulation means if in any year dividend is not declared and paid, sich unpaid dividend will be accumulated in the further years for payment.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Essex Company has a single class of common shares and a single class of cumulative preferred...
Essex Company has a single class of common shares and a single class of cumulative preferred shares. The cumulative preferred shares require the corporation to pay an annual dividend of $4,000 to preferred shareholders. On January 1, 2018, Essex’s preferred dividends were one year in arrears, which means that Essex declared neither preferred nor common dividends in 2017.  From 2018 to 2019, Essex’s Board of Directors determined that they would be able to pay dividends at $10,000 and $14,000, respectively. Required:  ...
Essex Company has a single class of common shares and a single class of cumulative preferred...
Essex Company has a single class of common shares and a single class of cumulative preferred shares. The cumulative preferred shares require the corporation to pay an annual dividend of $6,000 to preferred shareholders. On January 1, 2018, Essex’s preferred dividends were one year in arrears, which means that Essex declared neither preferred nor common dividends in 2017. From 2018 to 2019, Essex’s Board of Directors determined that they would be able to pay dividends at $10,000 and $14,000, respectively....
Inc. has 1,000, 000 shares with Dividends $3.20 cumulative Preferred Stocks and 4,000,000 Common Stock Shares...
Inc. has 1,000, 000 shares with Dividends $3.20 cumulative Preferred Stocks and 4,000,000 Common Stock Shares . After 1 year in arrears, Inc. declared $8,200,000 in dividends. What is the preferred stock dividend per share ? What is the common stock dividend per share?
1. Which of the following statements is not true? Preferred dividends are tax deductible, therefore, preferred...
1. Which of the following statements is not true? Preferred dividends are tax deductible, therefore, preferred stock is similar to debt Preferred stockholders receive dividends at a pre-specified rate. Dividends in arrears and the current period’s preferred dividend must be paid before common shareholders can receive a dividend if the preferred stock is cumulative. Preferred stock is unlike debt because preferred stockholders receive dividends in a given year only if they are declared. 2. Toledo Corporation reacquired 2,500 shares of...
2.Which of the following is true? Select one: a. Preferred dividends can be paid only if...
2.Which of the following is true? Select one: a. Preferred dividends can be paid only if common shareholders vote in favor of doing so at the AGM. b. If dividends have been in arrears for a lengthy period, preferred shareholders may be able to vote at the AGM in favor of directors who would treat them more kindly. c. In the event of a liquidation, preferred shareholders are paid whatever dividends are in arrearage and nothing else. d. Firms are...
Question#3: Cash Dividends with Cumulative Preferred Stock       Tucker Exports has the following stock outstanding: 25,000...
Question#3: Cash Dividends with Cumulative Preferred Stock       Tucker Exports has the following stock outstanding: 25,000 shares of $80 par value, 6% cumulative preferred stock 150,000 shares of $2.50 par value, common stock The company declares and pays the following dividends for the past four years: 2017              $ 65,000 2018              $412,000 2019              $303,000 2020              No dividends are paid Compute the total cash dividends paid to each class of stock in 2017 through 2020 using the following table. Arrearage Preferred Common...
521. Car company has issues 75,000 of $1 par, 6% cumulative preffered stock. preferred dividends are...
521. Car company has issues 75,000 of $1 par, 6% cumulative preffered stock. preferred dividends are 3 years in arrears. Car company has 200,000 shares of $0.50 par common stock issued and 50,000 shares of treasury stock. Total dividends declared in currebt year are $240,000. what is dividend per share the common stockholders will receive ?
Question 2 Rachel’s Designs has 1,700 shares of 5%, $50 par value cumulative preferred stock issued...
Question 2 Rachel’s Designs has 1,700 shares of 5%, $50 par value cumulative preferred stock issued at the beginning of 2016. All remaining shares are common stock. Due to cash flow difficulties, the company was not able to pay dividends in 2016 or 2017. The company plans to pay total dividends of $14,000 in 2018. How much of the $14,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders? Preferred dividends for 2018...
Problem 4 The Mark Company has $250,000 to pay dividends. The company has 25,000 shares of...
Problem 4 The Mark Company has $250,000 to pay dividends. The company has 25,000 shares of 8%, $50 par, preferred stock and 100,000 shares of $5 par common stock outstanding. The common stock is currently selling for $43 per share and the preferred stock is selling for $95 per share on the stock market. ​ Determine the amount of dividends to be paid for each class of stock in each of the independent situations. ​ 1) Preferred stock is nonparticipating...
When a dividend is not declared on preferred stock, and the common share­holders cannot receive a...
When a dividend is not declared on preferred stock, and the common share­holders cannot receive a dividend until all past and current dividends are paid to the preferred shareholders, the preferred stock is a. noncumulative b. participating c. redeemable d. cumulative.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT