A corporation has 10,000 shares of 20%, $60 par cumulative preferred stock outstanding and 32,000 shares of no-par common stock outstanding. Preferred dividends of $22,000 are in arrears. At the end of the current year, the corporation declares a dividend of $236,000. What is the dividend per share for preferred stock and for common stock? (Round your answer to the nearest cent.)
A) The dividend per share is $6.00 for preferred stock and $13.57 per share for common stock.
B) The dividend per share is $23.60 for preferred stock and $0 per share for common stock.
C) The dividend per share is $14.20 for preferred stock and $2.94 per share for common stock.
D) The dividend per share is $23.60 for preferred stock and $2.94 per share for common stock.
C) The dividend per share is $14.20 for preferred stock and $2.94 per share for common stock.
Explanation: Total amount paid to preferred shareholders: ($60 × 20% × 10,000 shares current year) + $22,000 in arrears = $142,000
Dividend per preferred share = $142,000 / 10,000 shares = $14.20
Dividend per common share: $236,000 - $142,000 = $94,000.00 / 32,000 shares = $2.94
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