At the beginning of 2011, Emily Corporation issued 10,000 shares of $100 par, 5%, cumulative, preferred stock for $110 per share. No dividends have been paid to preferred or common shareholders. What amount of dividends will a preferred shareholder owning 100 shares receive in 2013 if Emily pays $1,000,000 in dividends?

Question

Quizplus · Accepted Answer

The preferred shareholder will receive dividends for 2011, 2012, and 2013. Each year, they are entitled to $500 (100 shares x $100 par x 5%). Since the dividends are cumulative, they will receive $500 for each of the three years, totaling $1,500.

At the Beginning of 2011, Emily Corporation Issued 10,000 Shares