Question

Atlantis Corporation has​ 12,000 shares of​ 14%, $78 par noncumulative preferred stock outstanding and​ 29,000 shares of​ no-par common stock outstanding. At the end of the current​ year, the corporation declares a dividend of​ $188,000. How is the dividend allocated between preferred and common​ stockholders?

Answer 1

Answer:

The preferred shareholders will be allocated a dividend of $131040 and the common shareholders will be allocated a dividend of $56960.

Explanation:

Total dividend declared =$188000

the allocation of dividends:

Preferred shareholders = (12000×14%)×$ 78

                                       = $ 131040

Common shareholders = Total dividends - preferred shareholders dividend

                                       = $ 188000 - $ 131040

                                       = $ 56960

Therefore, the common shareholders will be allocated dividends of $ 56960 and the preferred shareholders will be allocated dividends of $ 131040.