Miriah Inc. has 6,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2012. What is the annual dividend on the preferred stock?

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Quizplus · Accepted Answer

The annual dividend on the preferred stock is calculated as 5% of the par value ($100) per share. Therefore, 5% of $100 is $5 per share. With 6,000 shares, the total annual dividend is 6,000 shares * $5 = $30,000.