Cuther Inc., has 1,000 shares of 6%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2009, and December 31, 2010. The board of directors declared and paid a $2,000 dividend in 2009. In 2010, $12,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2010?

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The preferred stock is cumulative, which means that any dividends that are not paid in a given year must be paid in a future year before any dividends can be paid to the common stockholders. In 2009, the preferred stockholders are entitled to a dividend of $6,000 (1,000 shares x $6 per share). Since only $2,000 of dividends were paid in 2009, the preferred stockholders are entitled to an additional $4,000 of dividends in 2010. This means that the common stockholders will only receive $8,000 of dividends in 2010 ($12,000 total dividends - $4,000 preferred dividends).