Question

Fischer Company has outstanding 8,000 shares of $100 par value, 5% preferred stock, and 50,000 shares of $1 par value common stock. The company has $328,000 of retained earnings. At year-end, the company declares and pays the regular $5 per share cash dividend on preferred stock and a $1.80 per share cash dividend on common stock. What is the total dividends paid by Fischer Company

Answer 1

Answer:

The appropriate solution is "$130,000".

Explanation:

The given values are:

No. of common shares outstanding

= 50,000

Dividend per share

= $1.80

No. of preferred shares outstanding

= 8,000

Dividend per share

= $5

Now,

The total dividend on common shares will be:

=  $No. \ of \ common \ shared \ outstanding\times Dividend \ per \ share$

On substituting the values, we get

=  $50,000\times 1.80$

=  $90,000$ ($)

The total dividend on preferred stock will be:

=  $No. \ of \ preferred \ shares \ outstanding\times Divided \ per \ share$

On substituting the values, we get

=  $8,000\times 5$

=  $40,000$ ($)

Hence,

The total dividend paid by company will be:

=  $Total \ dividend \ on \ common \ shares +Total \ dividend \ on \ preferred \ stock$

=  $90,000+40,000$

=  $130,000$ ($)

Thus the above is the correct answer.