Orleans Company was incorporated on January 1, 2012. Orleans issued 4,000 shares of common stock and 500 shares of preferred stock on that date. The preferred shares are cumulative, $100 par, with an 8% dividend rate. Orleans has not paid any dividends yet. In 2015, Orleans had its first profitable year, and on November 1, 2015, Orleans declared a total dividend of $28,000. What is the total amount that will be paid out to common shareholders?

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The preferred shareholders are entitled to cumulative dividends of $4,000 per year (500 shares x $100 par x 8%) for 2012, 2013, 2014, and 2015, totaling $16,000. The remaining $12,000 of the $28,000 declared dividend will be paid to common shareholders.

Orleans Company Was Incorporated on January 1, 2012