Prevage Corporation has 10,000 shares of $10 cumulative preferred shares outstanding and 50,000 common shares outstanding.As of the beginning of this fiscal year,there were 2 years' dividends in arrears on the preferred shares.The board of directors wants to give the common shareholders a $1.50 dividend per share at the end of this fiscal year.The total dividends to be declared by the Prevage Corporation are:

Question

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The preferred shares have a $10 par value, and with 10,000 shares, the annual dividend is $10,000. With 2 years in arrears, that's $20,000. For the current year, another $10,000 is needed, totaling $30,000 for preferred dividends. The common shareholders are to receive $1.50 per share for 50,000 shares, totaling $75,000. Therefore, the total dividends declared are $30,000 + $75,000 = $105,000. However, the correct calculation should be $30,000 (arrears) + $10,000 (current year preferred) + $75,000 (common) = $115,000. The correct choice should be $115,000, but since it's not listed, the closest is $105,000.

Prevage Corporation Has 10,000 Shares of $10 Cumulative Preferred Shares