Xtreme Sports has $100,000 par,8% noncumulative,nonparticipating,preferred stock outstanding.Xtreme Sports also has $500,000 par common stock outstanding.In the company's first year of operation,no dividends were paid.During the second year,Xtreme Sports paid cash dividends of $30,000.This dividend should be distributed as follows:

Question

Quizplus · Accepted Answer

The preferred stock is noncumulative, so only the current year's dividend of 8% on $100,000, which is $8,000, is paid to preferred shareholders. The remaining $22,000 goes to common shareholders.

Xtreme Sports Has $100,000 Par,8% Noncumulative,nonparticipating,preferred Stock Outstanding