Gault Corporation had the following shares of stock outstanding on December 31, 2010: Common stock, $50 par value, 200,000 shares outstanding
Preferred stock, 8 percent, $100 par value, cumulative, 20,000 shares outstanding
Dividends were in arrears for 2008 and 2009. On December 31, 2010, total cash dividends of $800,000 were declared. The total amounts payable to preferred stockholders and common stockholders, respectively, are

Question

Quizplus · Accepted Answer

The preferred stockholders are entitled to dividends for 2008, 2009, and 2010. Each year, they receive 8% of $100 par value, which is $8 per share. For 20,000 shares, this is $160,000 per year. Over three years, this totals $480,000. The remaining $320,000 of the $800,000 total dividends goes to the common stockholders.

Gault Corporation Had the Following Shares of Stock Outstanding on December