Wininger Corporation has 1,000 shares of 6%,$50 par value,cumulative preferred stock and 25,000 shares of $1 par value common stock outstanding on December 31,2014 and December 31,2015.The board of directors declared and paid a $2,000 dividend in 2014.In 2015,$12,000 of dividends are declared and paid.What are the dividends received by the common stockholders in 2015?

Question

Quizplus · Accepted Answer

First, let's calculate the dividend due to the preferred stockholders in 2015:
Preferred dividend = 1,000 shares * $50 par value * 6% = $3,000

Since the preferred stock is cumulative, any unpaid dividends from previous years must also be paid before common stockholders can receive any dividends. From the information given, we know that the $2,000 dividend paid in 2014 was fully paid to the preferred stockholders, so there are no unpaid dividends carried forward.

Therefore, the remaining $9,000 of the $12,000 dividend declared in 2015 can be paid to the common stockholders:
Dividend for common stockholders = $12,000 - $3,000 (preferred stock dividend) = $9,000

So the dividends received by the common stockholders in 2015 are $9,000, which corresponds to choice letter B.

Wininger Corporation Has 1,000 Shares of 6%,$50 Par Value,cumulative Preferred