If the board of directors declares a $210,000 dividend in 20X3,current year dividends on cumulative preferred stock are $80,000,dividends in arrears on cumulative preferred stock are $60,000,and the common shareholders are entitled to $70,000 of the 20X3 dividend amount.

Question

Quizplus · Accepted Answer

The total amount of preferred dividends to be paid in 20X3 would be $80,000 + $60,000 = $140,000. This leaves $70,000 for the common shareholders, as stated in the question. Therefore, the answer is A - this statement is true.

If the Board of Directors Declares a $210,000 Dividend in 20X3,current