Occidental Produce Company has 40,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $0.01 par value; the preferred stock is 4% noncumulative, with $100 par value. On October 15, 2015, the company declares a total dividend payment of $40,000. How much dividend will be paid to the preferred shareholders?

Question

Quizplus · Accepted Answer

The dividend payment to preferred shareholders can be calculated as follows:
Number of preferred shares x Par value of preferred stock x Dividend rate
= 2,000 x $100 x 4% = $8,000
Therefore, the answer is choice C, $8,000.

Occidental Produce Company Has 40,000 Shares of Common Stock Outstanding