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Assume CGM Corp has issued and outstanding 22,000 shares of 5%, $25 par value preferred stock...

Assume CGM Corp has issued and outstanding 22,000 shares of 5%, $25 par value preferred stock and issued and outstanding 15,000 shares of $15 stated value common stock. The board of directors declares dividends of $100,000 on December 15, 2020, the preferred stock is cumulative, and dividends paid to the preferred stockholders has been as follows: 2017 - $13,750; 2018 - $21,250; and 2019 - $15,000. What amount is allocated to common stockholders?

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Answer #1
2017 2018 2019 Total
Preferred dividend (22,000*$25*5%) $ 27,500 $ 27,500 $ 27,500
Less: Dividends paid $ 13,750 $ 21,250 $ 15,000
Balance to be paid $ 13,750 $    6,250 $ 12,500 $ 32,500
Dividend declared in 2020 $ 100,000
Less: Cumulative dividend payable $ (32,500)
Less: Dividend for 2020 $ (27,500)
amount is allocated to common stockholders $    40,000

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