Question

On January 2, 2017, Coronado Corporation issued 31000 shares of 5% cumulative preferred stock at $100 par value. On December 31, 2020, Coronado Corporation declared and paid its first dividend. What dividends are the preferred stockholders entitled to receive in the current year before any distribution is made to common stockholders?

Answer 1

Answer:

$155,000

Explanation:

The amount of dividends that will be received by the Preferred stock holder before any dividend is made to the common stock holders shall be determined as follow:

Amount to be received by the Preferred stock holder=Number of preferred shares*Percentage on preferred shares*par value of preferred share.

Amount to be received=31,000*5%*100=$155,000