Resco Corporation has had 10,000 shares of $3,cumulative preferred shares outstanding as well as 35,000 common shares since it was incorporated.During the first,second,and third years of operations,$10,000,$20,000 and $80,000 in dividends,respectively,were paid.The dividends paid to the common shareholders in year three amounted to:

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The cumulative preferred shares have a priority claim on the dividend payments. Therefore, the total amount of dividends paid to preferred shareholders for the first three years is $9,000 ($3 per share x 10,000 shares x 3 years). Since the total amount of dividends paid in year three was $80,000, the remaining amount available for distribution to common shareholders is $80,000 - $9,000 = $71,000. Dividing this by the number of common shares (35,000) gives a dividend per share of $2. Therefore, the total amount of dividends paid to common shareholders in year three is $2 per share x 35,000 shares = $70,000.

Resco Corporation Has Had 10,000 Shares of $3,cumulative Preferred Shares