Luther Inc., has 4,000 shares of 5%, $50 par value, cumulative preferred stock and 100,000 shares...
Luther Inc., has 4,000 shares of 5%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2020, and December 31, 2019. The board of directors declared and paid an $8,000 dividend in 2019. In 2020, $40,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2020?
Select one:
a $30,000
b. $28,000
c. None of the choices given
d. $20,000
e. $40,000
Homework Answers
| Annual dividend for cumulative preferred shares | |||||||||
| =4000 shares *$50*5% | |||||||||
| =$10000 | |||||||||
| In 2019 total dividend paid was $8000 | |||||||||
| that means in 2019 unpaid dividend to the preferred stock would be | |||||||||
| =$10000-8000 | |||||||||
| =$2000 | |||||||||
| In 2020 the total dividend paid was $40000 | |||||||||
| Out of which dividend to preferred stockholders would be | |||||||||
| =$10000+$2000 | |||||||||
| =$12000 | |||||||||
| Therefore dividend to common stockholders would be | |||||||||
| =$40000-$12000 | |||||||||
| =$28000 | |||||||||
| Correct Option : b | |||||||||
| Kindly give a positive rating if you are satisfied with this solution and please ask if you have any queries. | |||||||||
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Luther Inc., has 4,000 shares of 5%, $50 par value, cumulative preferred stock and 100,000 shares...
Luther Inc., has 4,000 shares of 6%, $50 par value, cumulative preferred stock and 100,000 shares...
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