Atlantis Corporation has 12,000 shares of 14%, $78 par noncumulative preferred stock outstanding and 29,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $188,000. How is the dividend allocated between preferred and common stockholders?
A) The dividend is allocated $6023 to preferred stockholders and $132,976 to common stockholders.
B) The dividend is allocated $131,040 to preferred stockholders and $56,960 to common stockholders.
C) The dividend is allocated $55,024 to preferred stockholders and $132,976 to common stockholders.
D) The dividend is allocated $316,680 to preferred stockholders and $128,680 to common stockholders.
B) The dividend is allocated $131,040 to preferred stockholders and $56,960 to common stockholders.
Explanation: Dividend allocated to preferred stockholders: $78 × 14% × 12,000 shares = $131,040
Dividend allocated to common stockholders: $188,000 - $131,040 = $56,960
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