Elmore Corporation had the following shares of stock outstanding on December 31,2013: Common stock,$250 par value,200,000 shares outstanding
Preferred stock,8 percent,$50 par value,cumulative,20,000 shares outstanding
Dividends were in arrears for 2011 and 2012.On December 31,2013,total cash dividends of $400,000 were declared.The total amounts payable to preferred stockholders and common stockholders,respectively,are
A) $80,000 and $320,000.
B) $240,000 and $160,000.
C) $160,000 and $240,000.
D) $200,000 and $200,000.

Question

Quizplus · Accepted Answer

The preferred stockholders are entitled to dividends for 2011, 2012, and 2013. Each year, they receive 8% of $50 par value per share, which is $4 per share. With 20,000 shares, this amounts to $80,000 per year. For three years, this totals $240,000. The remaining $160,000 of the $400,000 total dividends goes to the common stockholders.

Elmore Corporation Had the Following Shares of Stock Outstanding on December