Answer:
Trusper Company
The total amount of dividends that will be paid to common stockholders during Year 2 is:
$40,000.
Explanation:
a) Data and Calculations:
10% cumulative preferred stock = $200,000 ($200 * 1,000)
Common stock = $3,000 (3,000 * $1)
Dividends in Year 1 for cumulative preferred stockholders = $20,000 ($200,000 * 10%)
Dividends outstanding after Year 1 for cumulative preferred stockholders = $15,000 ($20,000 - $5,000)
Dividends for Year 2 for cumulative preferred stockholders = $35,000 ($20,000 + $15,000).
Total dividend paid to common stockholders during Year 2 = $40,000 ($75,000 - $35,000)
b) The unpaid cumulative preferred stock dividend of $15,000 for Year 1 will be added to the dividend of the Year 2. The common stockholders are not paid any dividends in Year 1. But in Year 2, they will get $40,000 after the cumulative preferred stock dividends are paid.
