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, 2021.There were no dividends declared in 2020.The board of directors declares and pays a $65,000 dividend in 2021.What is the amount of dividends received by the common stockholders in 2021?

Question

Quizplus · Accepted Answer

The preferred stock will receive a dividend of $25,000 calculated as follows:

($100 par value x 5% dividend rate) x 5,000 shares = $25,000

The remaining $40,000 will be paid to the common stockholders.