Answer:
the common stockholders receive $162,000
Explanation:
Preference Shareholders have <em>preference interest</em> over the dividends of Written Inc. This means the preference share holders will be paid their dividends <em>before</em> the common shareholders receive theirs
Note : The preferred stock is <em>cumulative</em> meaning that any dividends in <em>arrears would have to be paid first</em> before payment of dividends relating to current year dividends are declared and issued
<u>Preference Dividends Arrears</u>
Past Two years = (120,000 shares×$5×6%)×2
=$72,000
Current Year = 120,000 shares×$5×6%
=$36,000
Total = $72,000+$36,000 = $108,000
<u>Dividends Paid to Common stockholders</u>
Total Distributed Dividend $270,000
<em>Less</em> Distributed to Preference shareholders($108,000)
Paid to Common stockholders $162,000
