Question

Splish Brothers Inc. has 9300 shares of 4%, $50 par value, cumulative preferred stock and 186000 shares of $1 par value common stock outstanding at December 31, 2017, and December 31, 2016. The board of directors declared and paid a $12900 dividend in 2016. In 2017, $64500 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2017?

Answer 1

Answer:

The dividends received by the preferred stockholders in 2017 is $24,300

Explanation:

The computation of the preferred stockholder dividend is shown below:

= Yearly dividend - dividend paid in 2016

where,

Yearly dividend = Number of shares × par value per share × rate

                          = 9,300 shares × $50 × 4%

                          = $18,600

And, the 2016 dividend is $12,900

Now put these values to the above formula  

So, the value would equal to

= $18,600 - $12,900

= $5,700

So, the total dividend would be

= Year end dividend + last year dividend

= $18,600 + $5,700

= $24,300

Out of the $64,500, the $24,300 will be distributed to the preference shareholders and the remaining amount $402,00 would be distributed to the common stockholders