Ultimate Sportswear has $100,000 of 8% noncumulative,nonparticipating,preferred stock outstanding.Ultimate Sportswear also has $500,000 of common stock outstanding.In the company's first year of operation,no dividends were paid.During the second year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

Question

Quizplus · Accepted Answer

The preferred stock is noncumulative, so only the current year's dividend is considered. 8% of $100,000 is $8,000 for preferred stock, leaving $22,000 for common stock.

Ultimate Sportswear Has $100,000 of 8% Noncumulative,nonparticipating,preferred Stock Outstanding