Anders, Inc., has 15,000 shares of 5%, $100 par value, cumulative preferred stock and 60,000 shares of $1 par value common stock outstanding at December 31, 2015. There were no dividends declared in 2013. The board of directors declares and pays a $135,000 dividend in 2014 and in 2015. What is the amount of dividends received by the common stockholders in 2015?

Question

Quizplus · Accepted Answer

The preferred stockholders are entitled to $75,000 annually (15,000 shares * $100 * 5%). Since no dividends were declared in 2013, the 2014 dividend of $135,000 covers the 2013 and 2014 preferred dividends ($75,000 each). In 2015, the preferred stockholders receive their $75,000, leaving $60,000 for common stockholders.