The following information is provided for Slickers, Inc. for year 2016: • Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for 2014 and 2015
• Total dividends declared and paid during 2016 totaled $25,000
How much of the dividend was paid to the common stockholders during 2016 assuming the preferred stock is noncumulative?
A)$3,500.
B)$7,000.
C)$21,500.
D)$14,500.

Question

Quizplus · Accepted Answer

Since the preferred stock is noncumulative, dividends in arrears do not need to be paid. The preferred stockholders receive 7% of $50 par value for 1,000 shares, which is $3,500. The remaining $21,500 ($25,000 - $3,500) is paid to the common stockholders.

The Following Information Is Provided for Slickers, Inc