Marion, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2015. There were no dividends declared in 2014. The board of directors declares and pays a $65,000 dividend in 2015. What is the amount of dividends received by the common stockholders in 2015?

Question

Quizplus · Accepted Answer

First, we need to calculate the dividend payments for the preferred stock:

Preferred dividend = 5% * $100 * 5,000 = $25,000

The remaining $40,000 ($65,000 - $25,000) will be paid to the common stockholders. Therefore, the amount of dividends received by the common stockholders in 2015 is $40,000.