A corporation has 5,000 shares of 8 percent noncumulative preferred stock and 10,000 shares of common stock outstanding.Par value for each is $50.No dividends were paid last year,but this year a $46,500 dividend is paid.How much of this $46,500 goes to the holders of common stock?

Question

Quizplus · Accepted Answer

The preferred stockholders receive their 8% dividend first, which is 5,000 shares * $50 * 8% = $20,000. The remaining $46,500 - $20,000 = $26,500 goes to the common stockholders.

A Corporation Has 5,000 Shares of 8 Percent Noncumulative Preferred