Question

Sheridan Company declared a $229000 cash dividend. It currently has 12300 shares of 4%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Sheridan distribute to the common stockholders

Answer 1

Answer and Explanation:

The computation is shown below:

For preferred shareholders

The dividend is

= 12,300 shares × 4% × $100

= $49,200

For two years, it would be

= $49,200 × 2

= $98,400

And, the total cash dividend declared is $229,000

So, the cash distribute to common stockholder is

= $229,000 - $98,400

= $130,600

hence, the cash distribute to common stockholder is $130,600