Saturn Corporation has 13,000 shares of 14%, $84 par noncumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding
At the end of the current year, the corporation declares a dividend of $180,000. How is the dividend allocated between preferred and common stockholders?
A) The dividend is allocated $8,107 to preferred stockholders and $109,091 to common stockholders.
B) The dividend is allocated $152,880 to preferred stockholders and $27,120 to common stockholders.
C) The dividend is allocated $70,909 to preferred stockholders and $109,091 to common stockholders.
D) The dividend is allocated $235,200 to preferred stockholders and $55,200 to common stockholders.
B .B) Dividend allocated to preferred stockholders: $84 x 14% x 13,000 shares = $152,880
Dividend allocated to common stockholders: $180,000 - $152,880 = $27,120
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