A corporation has 5,000 shares of 8 percent noncumulative preferred stock and 10,000 shares of common stock outstanding.Par value for each is $100.No dividends were paid last year,but this year a $93,000 dividend is paid.How much of this $93,000 goes to the holders of common stock?

Question

Quizplus · Accepted Answer

The preferred stockholders receive 8% of $100 par value, which is $8 per share. With 5,000 shares, they receive $40,000. The remaining $53,000 ($93,000 - $40,000) goes to the common stockholders.

A Corporation Has 5,000 Shares of 8 Percent Noncumulative Preferred