Question

​Electric, Inc. was incorporated on January​ 1, 2016. Electric issued 7 comma 000 shares of common stock and 1 comma 200 shares of preferred stock on that date. The preferred stock is​ cumulative, $ 100.00 ​par, with an 10​% dividend rate. Electric has not paid any dividends yet. In​ 2019, Electric had its first profitable​ year, and on November​ 1, 2019, Electric declared a total dividend of $ 50 comma 000. What is the total amount that will be paid to preferred​ shareholders?

Answer 1

Answer:

$48,000

Explanation:

The computation of the total amount paid to the preferred shareholder is shown below:

= Number of preferred stock shares × par value × dividend rate × number of years

= 1,200 shares × $100 × 10% × 4 years

= $48,000

Simply we multiplied with the number of preferred stock with the par value, its dividend rate and the time period so that the correct value can come

All other information which is given is not relevant. Hence, ignored it