Arm, Inc., has 10,000 shares of 5%, $100 par value, noncumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2018. If the board of directors declares a $200,000 dividend, the

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Noncumulative preferred stock does not accumulate dividends if they are not paid in a given period. Therefore, the preferred stockholders do not receive any dividends until the common stockholders have received their dividend. The total dividend paid to the preferred stockholders is calculated as follows: 10,000 shares x $100 par value x 5% dividend rate = $50,000. The remaining amount of the dividend, $200,000 - $50,000 = $150,000 is then paid to the common stockholders. Therefore, the preferred stockholders will receive $50,000 and the common stockholders will receive $150,000.

Arm, Inc, Has 10,000 Shares of 5%, $100 Par Value, Noncumulative