On January 1,2017,Bank & Rupp,Inc.issued 100,000 shares of $1 par value common stock and 1,000 shares of $50 par value,6%,cumulative preferred stock.No dividends were declared in 2017.In 2018,Bank & Rupp declared and paid the preferred stockholders and a $1 per share dividend to its common stockholders.Assuming all shares originally issued are outstanding,the total dividend paid to the preferred stockholders equals:

Question

Quizplus · Accepted Answer

Preferred dividend = Number of shares outstanding × Par value × Annual dividend rate
= 1,000 shares × $50 × 0.06 = $3,000 (if declared)
2017:
Dividends in arrears = $3,000
2018:
Preferred dividends = ($3,000 for 2017 + $3,000 for 2018)= $6,000