Trading Places,a multi-national corporation,had a very successful year.The board of directors declared and paid a cash dividend of $50,000.The prior year,Trading Places did not pay dividends on its 400 shares of noncumulative,8%,$100 par,preferred stock.How much of the cash dividend was paid to the PREFERRED shareholders?

Question

Quizplus · Accepted Answer

The preferred shareholders receive 8% of the $100 par value per share, which is $8 per share. With 400 shares, the total dividend for preferred shareholders is 400 shares * $8 = $3,200. Since the preferred stock is noncumulative, they do not receive any dividends for the prior year.

Trading Places,a Multi-National Corporation,had a Very Successful Year