Beckham Corporation has 3,000 shares of $100 par value,7 percent cumulative preferred stock,and 10,000 shares of $10 par value common stock outstanding during its first five years of operation.Beckham Corporation paid cash dividends as follows: 2006,$17,000; 2007,$0; 2008,$65,000; 2009,$30,000; 2010,$15,000.The amount of dividends received by the preferred stockholders during 2008 was

Question

Quizplus · Accepted Answer

The preferred stock is cumulative, meaning that any unpaid dividends from previous years must be paid before common stock dividends can be paid. Therefore, in 2008, the preferred stockholders are entitled to receive the dividends from 2007 ($0) and from 2008 ($65,000). The total amount of dividends received by the preferred stockholders during 2008 is $65,000. Therefore, the correct answer is B.

Beckham Corporation Has 3,000 Shares of $100 Par Value,7 Percent