Denson Inc.has 10000 shares of 5% $100 par value non-cumulative preferred stock and 40000 shares of $1 par value common stock outstanding at December 31 2022.There were no dividends declared in 2021.The board of directors declares and pays a $120000 dividend in 2021.What is the amount of dividends received by the common stockholders in 2021?

Question

Quizplus · Accepted Answer

Non-cumulative preferred stocks do not accumulate any unpaid dividends. So, the $120,000 dividend declared in 2021 will be paid only to the preferred stockholders. The common stockholders will not receive any dividend as there were no dividends declared in 2021 to be distributed to them. Therefore, the amount of dividends received by the common stockholders in 2021 is $0.