A company has the following paid-in capital:

-Use the information above to answer the following question.If the company pays a $15,000 dividend and the preferred stock is noncumulative,what is the amount the common stockholders will receive?
A) $15,000
B) $9,000
C) $9,900
D) $0

Question

A company has the following paid-in capital:
 
-Use the information above to answer the following question.If the company pays a $15,000 dividend and the preferred stock is noncumulative,what is the amount the common stockholders will receive?
A) $15,000 
B) $9,000 
C) $9,900 
D) $0

Quizplus · Accepted Answer

Since the preferred stock is noncumulative, it means that the preferred stockholders are not entitled to any unpaid dividends from previous periods. Therefore, the $15,000 dividend will be paid only to the common stockholders. 
Assuming there are no dividends in arrears to preferred stockholders, the common stockholders will receive the entire $15,000 dividend. 
Therefore, the amount the common stockholders will receive is $15,000, and the answer is B.

A Company Has the Following Paid-In Capital