A corporation has 5,000 shares of 6 percent, $100 par-value preferred stock and 50,000 shares of $2 par-value common stock outstanding. If the board of the directors declares dividends totaling $90,000, the common stockholders will receive a dividend of:

Question

Quizplus · Accepted Answer

First, calculate the dividends for preferred stock: 5,000 shares * $100 par * 6% = $30,000. Then, subtract this from the total dividends: $90,000 - $30,000 = $60,000 for common stock. Divide by the number of common shares: $60,000 / 50,000 shares = $1.20 a share.

A Corporation Has 5,000 Shares of 6 Percent, $100 Par-Value