Bannon Corporation has 100 shares of $47 par, 7% cumulative preferred stock and 2,900 shares of 17 par common stock. Bannon paid $19,000 in cash dividends including one-year dividends in arrears to preferred stockholders. Common stockholders will receive: (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

First, calculate the annual dividend for preferred stock: 100 shares * $47 par * 7% = $3290. Since there are dividends in arrears for one year, the total preferred dividends for this year would be $3290 * 2 = $6580. Subtracting this from the total dividends paid ($19,000 - $6580), the common stockholders will receive $13,420. However, the correct calculation for the preferred dividends should be as follows: The annual dividend for preferred stock is indeed $3290 (100 shares * $47 * 7%). For one year's dividends in arrears plus the current year, the total is $3290 * 2 = $6580. Subtracting this from the total dividends paid gives us $19,000 - $6580 = $13,420 for the common stockholders, not $18,342. The mistake was in the final calculation and interpretation of the provided options. The correct process was described, but the final answer and choice provided were incorrect based on the calculation. The correct answer should reflect the calculation based on the dividends paid to preferred stockholders first, then the remainder to common stockholders.

Bannon Corporation Has 100 Shares of $47 Par, 7% Cumulative