A corporation has 10,000 shares of 10%, $100 par noncumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $120,000. What is the dividend per share for preferred shares and for common shares?

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Quizplus · Accepted Answer

The preferred stock dividend is 10% of $100 par value, which is $10 per share. With 10,000 preferred shares, the total preferred dividend is $100,000. The remaining $20,000 of the $120,000 total dividend is distributed to the 20,000 common shares, resulting in $1 per common share.

A Corporation Has 10,000 Shares of 10%, $100 Par Noncumulative