Outstanding stock of the West Corporation included 40,000 shares of $5 par common stock and 10,000 shares of 5%, $10 par non-cumulative preferred stock. In 2016, West declared and paid dividends of $4,000. In 2017, West declared and paid dividends of $20,000. How much of the 2017 dividend was distributed to preferred shareholders?
A)$9,000.
B)$15,000.
C)$5,000.
D)None of these answer choices are correct.

Question

Quizplus · Accepted Answer

The preferred shareholders receive 5% of $10 par value per share, which is $0.50 per share. With 10,000 shares, they receive $5,000 in dividends. Since the preferred stock is non-cumulative, they do not receive any unpaid dividends from previous years.

Outstanding Stock of the West Corporation Included 40,000 Shares of $5