A corporation has 18,000 shares of 13%, $50 par cumulative preferred stock outstanding and 34,000 shares of no-par common stock outstanding
Dividends of $22,000 are in arrears. At the end of the current year, the corporation declares a dividend of $208,000. 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 $5.00 to preferred stock and $6.65 per share to common stock.
B) The dividend per share is $11.56 to preferred stock and $0 per share to common stock.
C) The dividend per share is $7.72 to preferred stock and $2.03 per share to common stock.
D) The dividend per share is $11.56 to preferred stock and $2.03 per share to common stock.
C .B)
C) Total amount paid to preferred shareholders: ($50 x 13% x 18,000 shares current year) + $22,000 in arrears = $139,000
Dividend per preferred share = $139,000 / 18,000 shares = $7.72
Dividend per common share: $208,000 - $139,000 = $69,000.00 / 34,000 shares = $2.03
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