Homework Answers
Annual preferred dividend = Number of preferred shares x Par value of 1 preferred share x Dividend rate
= 5,000 x 10 x 7%
= $3,500
Dividend is in arrears for preferred stock for the year 2018.
Hence, in 2019, Preferred Dividend to be paid is = Dividend in arrears for 2018 + Dividend for current year
= 3,500+3,500
= $7,000
Thus, dividend declared of $6,000 in 2019 belongs to Preferred stockholders only.
Dividend in arrears for 2019 = 7,000-6,000
= $1,000
In the year 2019, Preferred dividend will be = 3,500+1,000
= $4,500
| Year | Preferred | Common |
| 2019 | 6,000 | |
| 2020 | 4,500 | 1,500 |
| 2021 | 3,500 | 2,500 |
Kindly comment if you need further assistance. Thanks‼!
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