Answer:
$40,235
Explanation:
Dividend distributed to preferred share is based on the predetermined rate associated with these share. When the dividend is declared preferred share dividend is paid first. The remainder is distributed between the common stockholders.
Dividend Declared = $64,000
Preferred Dividend = $100,000 x 7% = $7,000
Participation
Preferred Shares = $100,000 / $20 = 5,000 shares
Common shares = 12,000 shares
Total Shares = 12,000 + 5,000 = 17,000 shares
on Pro-rata basis
Participation dividend to preferred stockholder = ($64,000 - $7,000) x 5000 / 17000 = $16,765
Dividend to common stock holders = $64,000 - $7,000 - $16,765 = $40,235
