contestada

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?

Respuesta :

Answer:

$22,000

Explanation:

The computation of  amount of dividends common shareholders is shown below:-

Amount of annual preferred stock dividend = $ 400,000 par value × 6%

= $24,000

         Total Cash         Paid to Preferred      Paid to              Dividends in

       Dividend paid                                    Common     Arrears at Year end

2011     $40,000                $24,000          $16,000

2012      $20,000            $20,000             $ -                      $4,000

2013      $50,000              $28,000          $22,000             $  -

Total      $110,000            $72,000           $38,000

Therefore, out of $ 50,000 dividend declared and $28,000 is for Preferred stockholders $24,000 annual + 4,000 Arrears