On January 1, 2016, Warhol Company issued 1,000 shares of 10%, $200 par value, cumulative preferred stock for $300,000. No preferred dividends were declared in 2016 and 2017. On December 30, 2018, the Board declared $10,000 in dividends. What amount, if any, of preferred dividends are in arrears as of December 31, 2018?

Question

Quizplus · Accepted Answer

The preferred dividends in arrears are $40,000 for 2016 and 2017 ($20,000 each year), and $20,000 for 2018, totaling $60,000. Since only $10,000 was declared, $50,000 remains in arrears.

On January 1, 2016, Warhol Company Issued 1,000 Shares of 10