Custer.com Company's outstanding stock is 100 shares of $100,5% cumulative nonparticipating preferred stock and 1,000 shares of $10 par value common stock.Custer paid $2,300 cash dividends including one-year dividends in arrears to preferred stockholders.Common stockholders received:

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The preferred stockholders are entitled to $5 per share in dividends each year before any dividends can be paid to the common stockholders. Since there are 100 shares of preferred stock outstanding, the preferred stockholders are entitled to $500 in dividends each year. Since the preferred dividends are cumulative, the company must pay the preferred stockholders the dividends that were in arrears before any dividends can be paid to the common stockholders. Since the preferred dividends were in arrears for one year, the company must pay the preferred stockholders $500 for the current year's dividends and $500 for the dividends that were in arrears, for a total of $1,000. The remaining $1,300 of dividends can be paid to the common stockholders.

CusterCom Company's Outstanding Stock Is 100 Shares of $100,5% Cumulative