A corporation has 2,000 shares of 10 percent, $50 par-value preferred stock and 20,000 shares of $5 par-value common stock outstanding. If the board of the directors declares dividends totaling $80,000, the common stockholders will receive a dividend of:

Question

Quizplus · Accepted Answer

First, calculate the total dividend for preferred stock: 2,000 shares * $50 * 10% = $10,000. Subtract this from the total dividends declared ($80,000 - $10,000 = $70,000) to find the amount available for common stockholders. Divide this by the number of common shares (20,000) to find the dividend per common share: $70,000 / 20,000 = $3.50.

A Corporation Has 2,000 Shares of 10 Percent, $50 Par-Value