Question

The shareholders' equity of Green Corporation includes $386,000 of $1 par common stock and $570,000 par of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $67,000 in 2018 after paying $37,000 cash dividends in each of 2017 and 2016. What is the amount of dividends common shareholders will receive in 2018?

Answer 1

Answer:

The amount of dividends common shareholders will receive in 2018 is $21,300

Explanation:

The computation of amount of dividend of common shareholders is shown below:

Previous year stock dividend (2017 & 2016)  = ($570,000 × 7% ) - 37000 × 2

                                                = $5800

Current year stock dividend 2017  = $570,000 × 7% = $39900

Current year cash dividend 2018= $67,000

Now, subtract the 20178 stock dividend and previous year stock dividend from Current year cash dividend 2018 which equals to $21,300

= $67,000 - $39900 - $5800

= $21,300

Thus, the amount of dividends common shareholders will receive in 2018 is $21,300