John, Inc. has 5,000 shares of 6%, $200 par value, cumulative preferred stock and 100,000 shares of $2 par value common stock outstanding. There were no dividends declared in 2018. The board of directors declared and paid dividends of $100,000 each in 2019 and 2020.
What is the amount of dividends received by the common stockholders in 2020?

Question

Quizplus · Accepted Answer

Preferred stock dividend payable = 5,000 shares x $200 x 6% = $60,000 / year
Distribution of dividends:
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John, Inc Has 5,000 Shares of 6%, $200 Par Value, Cumulative