Outstanding stock of the West Corporation included 40,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par non-cumulative preferred stock. In 2013, West declared and paid dividends of $4,000. In 2014, West declared and paid dividends of $12,000. How much of the 2014 dividend was distributed to preferred shareholders?
A) $8,000.
B) $14,000.
C) $6,000.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

Preferred shareholders receive 6% of $10 par value per share, which is $0.60 per share. With 10,000 shares, they receive $6,000 in dividends. Since the preferred stock is non-cumulative, they only receive the current year's dividend, not any missed from previous years.

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