Assume the following shares outstanding: (1)Preferred shares,$3,cumulative,1,000 shares with dividends in arrears 3 years,for 20A,20B,and 20C.
(2)Common shares,2,000 shares.
Total dividends declared in 20D were $30,000.What is the total amount of dividends to which common shareholders are entitled?
A)$18,000
B)$21,000
C)$27,000
D)$30,000

Question

Quizplus · Accepted Answer

The preferred shareholders are entitled to dividends in arrears for 3 years plus the current year, totaling 4 years. This amounts to 1,000 shares x $3 x 4 years = $12,000. The remaining $18,000 ($30,000 - $12,000) is for the common shareholders.

Assume the Following Shares Outstanding: (1)Preferred Shares,$3,cumulative,1,000 Shares with Dividends