Sonny's Sails has declared a $44,000 cash dividend to shareholders. The company has 4,000 shares of $20-par, 6% preferred stock and 10,000 shares of $16-par common stock. The preferred stock is non-cumulative. How much will be distributed to the preferred and common stockholders on the date of payment?

Question

Quizplus · Accepted Answer

First, calculate the dividend for preferred stock: 4,000 shares * $20 * 6% = $4,800. Since the preferred stock is non-cumulative and the total dividend is $44,000, the remainder, $39,200, goes to common shareholders.

Sonny's Sails Has Declared a $44,000 Cash Dividend to Shareholders