Question

Texas Inc. has 10,000 shares of 6%, $125 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31. What is the annual dividend on the preferred stock?
a) .75 per share
b) 10,000 in total
c) $75 per share
d) $75,000 in total

Answer 1

Answer:

d) $75,000 in total

Explanation:

The computation of the annual dividend on the preferred stock is shown below:

= Number of shares × par value per share × dividend percentage

= 10,000 shares × $125 × 6%

= $75,000

We simply multiplied  the number  of shares with the oar value and the dividend percentage so that the accurate amount can be calculated

All other information which is given is not relevant. Hence, ignored it