Wininger Corporation has 1500 shares of 6%, $50 par value, cumulative preferred stock and 25,000 shares of $1 par value common stock outstanding on December 31, 2017 and December 31, 2018. The board of directors declared and paid a $2,000 dividend in 2017. In 2018, $14,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2018?

Question

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In 2017, the preferred stockholders should have received $4,500 (1500 shares * $50 * 6%), but only $2,000 was paid, leaving $2,500 in arrears. In 2018, the preferred stockholders receive $4,500 for the current year plus the $2,500 in arrears, totaling $7,000. The remaining $7,000 of the $14,000 declared in 2018 goes to the common stockholders.

Wininger Corporation Has 1500 Shares of 6%, $50 Par Value