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 $55,000 dividend is paid. How much of this $55,000 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 $15,000 of the $55,000 dividend goes to the common stockholders.

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