Question

Coronado, Inc. has 3500 shares of 4%, $50 par value, cumulative preferred stock and 70000 shares of $1 par value common stock outstanding at December 31, 2019. The board of directors declared and paid a $2700 dividend in 2019. In 2020, $18900 of dividends are declared and paid. What are the dividends received by the preferred and common shareholders in 2020

Answer 1

Answer:

$11,300 and $7,600

Explanation:

The computation of the dividend received by the preferred and common shareholders in the year 2020 is given below:

For the year 2019

Dividend paid to preferred shareholder = 3,500 shares × 4% × $50 = $7,000

But the dividend is paid $2,700

So, the balance left is

= $7,000 - $2,700

= $4,300

Now for the year 2020

Dividend paid to preferred shareholder = 3,500 shares × 4% × $50 = $7,000

But the dividend for 2019 is $4,300

So, the total dividend paid is

= $7,000 + $4,300

= $11,300

And, the total dividend declared is $18,900

So for common shareholders, the dividend would be

= $18,900 - $11,300

= $7,600