Answer:
The correct answer is option C:
$750,000; $3,850,000; $4,600,000; $25,870,000
<u>Task 1</u>
Annual cash dividend preferred stock = $750,000
<u>Task 2</u>
Total annual common stock dividend = $3,850,000
<u>Task 3</u>
Total dividend paid = $4,600,000
<u>Task 4</u>
Retained earnings balance = $25,870,000
Explanation:
<u>Task 1: </u>
<u>Annual cash dividend preferred stock </u>
Preferred shares = 500,000 shares
semi-annual dividend (after six months) = $0.75 per share
500,000 shares × 0.75 per share × 2 times = $750,000 (A)
<u>Task 2:</u>
<u>Total annual common stock dividend</u>
Quarterly dividend = $0.35 per share
Common shares = 2,750,000 shares
Total quarterly dividend = 2,750,000× $0.35 per share
Total quarterly dividend = $962,500
Total annual common stock dividend = $962,500 × 4
Total annual common stock dividend = $3,850,000 (B)
<u>Task 3</u>
<u>Total dividend paid</u>
Total dividend paid (A+B) = Annual cash dividend -preferred stock + Total annual common stock dividend
Total dividend paid = $750,000 + $3,850,000
Total dividend paid = $4,600,000
<u>Task 4</u>
<u>Retained earnings balance</u>
Retained earnings balance = Opening retained earnings + Net income after total cash dividend paid
Retained earnings balance = $25,320,000 + $5,150,000 - $4,600,000
Retained earnings balance = $25,870,000
