Ironworks,Inc.has declared a $20,000 cash dividend to shareholders.The company has 5,000 shares of $15-par,10% preferred stock and 10,000 shares of $20-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

The preferred stockholders will receive a total of $7,500, calculated as follows:
$15 par value x 5,000 shares = $75,000 total par value of preferred stock
10% x $75,000 = $7,500 dividend payment to preferred stockholders

The remaining $12,500 will be distributed to the common stockholders.