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Marco Co. has 10,000 shares of $50 par value, cumulative preferred stock. The annual dividend on the preferred stock is $3 per share. By the end of 2010, Marco had not declared any dividends for 4 years.
-On its 2010 year-end financial statements, Marco Co.

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Marco Co. has 10,000 shares of $50 par value, cumulative preferred stock. The annual dividend on the preferred stock is $3 per share. By the end of 2010, Marco had not declared any dividends for 4 years.
-On its 2010 year-end financial statements, Marco Co.

Quizplus · Accepted Answer

Dividends in arrears on cumulative preferred stock are not recognized as a liability until they are declared by the board of directors. Therefore, Marco Co. will not show a dividends in arrears liability, dividends payable liability, or accrue a dividend payable, and there is no specific stockholders' equity account for dividends in arrears.

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