Schultz Corp. has the following number of shares of stock outstanding: Schultz will distribute $42,000 to the two classes of stockholders this year. Not counting the current year, the preferred stock dividends are one year in arrears. Indicate whether each of the following statements is true or false.
_____ a) Preferred stockholders will receive $16,000 of cash dividends in the current year.
_____ b) After all required preferred dividends are paid, preferred and common stockholders will share the remaining dividend.
_____ c) Common stockholders will receive $34,000 of cash dividend in the current year.
_____ d) The amount of common dividends per share that stockholders will receive in the current year is $2.60.
_____ e) The amount of dividends in arrears is zero after the $42,000 of dividends have been paid.

Question

Schultz Corp. has the following number of shares of stock outstanding:  Schultz will distribute $42,000 to the two classes of stockholders this year. Not counting the current year, the preferred stock dividends are one year in arrears. Indicate whether each of the following statements is true or false.
_____ a) Preferred stockholders will receive $16,000 of cash dividends in the current year.
_____ b) After all required preferred dividends are paid, preferred and common stockholders will share the remaining dividend.
_____ c) Common stockholders will receive $34,000 of cash dividend in the current year.
_____ d) The amount of common dividends per share that stockholders will receive in the current year is $2.60.
_____ e) The amount of dividends in arrears is zero after the $42,000 of dividends have been paid.

Quizplus · Accepted Answer

The Answer of Schultz Corp. has the following number of shares of stock outstanding:  Schultz will distribute $42,000 to the two classes of stockholders this year. Not counting the current year, the preferred stock dividends are one year in arrears. Indicate whether each of the following statements is true or false.
_____ a) Preferred stockholders will receive $16,000 of cash dividends in the current year.
_____ b) After all required preferred dividends are paid, preferred and common stockholders will share the remaining dividend.
_____ c) Common stockholders will receive $34,000 of cash dividend in the current year.
_____ d) The amount of common dividends per share that stockholders will receive in the current year is $2.60.
_____ e) The amount of dividends in arrears is zero after the $42,000 of dividends have been paid.