Answer:
$50,000
Explanation:
Generally, preferred stockholders receive dividends earlier than common stockholders. Moreover, as the preference shareholders are cumulative, if they do not receive dividends current year, they will receive in the next year. Finally, preferred dividend is fixed until there are new issuance of preferred stock.
Preferred dividends for Year 1 = 1,000 shares × $200 × 10% = $20,000
For year 2 = $20,000
Given, total dividends in year 1 = $15,000
Therefore, company provides $15,000 to preferred dividends. No common dividends in year 1.
However, in the next year (Year 2), the company will pay $5,000 + $20,000 = $25,000 to preferences shareholders.
Therefore, remaining dividends are for common stockholders.
Year 2 common stockholders dividends = $75,000 - $25,000 = $50,000.
