The following information is provided for Slickers,Inc.for year 2019: • 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 2017 and 2018
• Total dividends declared and paid during 2019 totaled $25,000
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How much of the dividend was paid to the common stockholders during 2019 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 for 2017 and 2018 do not need to be paid in 2019. The preferred stockholders would receive 7% of the $50 par value, which is $3.50 per share. With 1,000 shares, this totals $3,500 ($3.50 * 1,000) for the preferred stockholders. The remaining $25,000 - $3,500 = $21,500 would be paid to the common stockholders.

The Following Information Is Provided for Slickers,Inc