The shareholders' equity of Green Corporation includes $200,000 of $1 par common stock and $400,000 par value of 6% cumulative preferred stock. The board of directors of Green declared cash dividends of $50,000 in 2013 after paying $20,000 cash dividends in each of 2012 and 2011. What is the amount of dividends common shareholders will receive in 2013?

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The preferred stock dividends are $24,000 annually (6% of $400,000). Since the preferred dividends are cumulative, any unpaid dividends from previous years must be paid before common shareholders receive dividends. In 2011 and 2012, $4,000 each year was unpaid ($24,000 - $20,000). Thus, $8,000 is owed for past years. In 2013, $24,000 is owed for preferred dividends, totaling $32,000. The remaining $18,000 ($50,000 - $32,000) is available for common shareholders.

The Shareholders' Equity of Green Corporation Includes $200,000 of $1