A company has outstanding 9 million shares of $2 par value common shares and 1 million shares of $4 par value preferred shares.The preferred shares have $0.32 dividend per share.The company declares $600,000 in total dividends for the year.Which of the following is true if dividends in arrears are $30,000?
A)Preferred shareholders will receive $350,000.Common shareholders will receive $250,000.
B)Preferred shareholders will receive $60,000.Common shareholders will receive $540,000.
C)Preferred shareholders will receive $320,000.Common shareholders will receive $280,000.
D)Preferred shareholders will receive $90,000.Common shareholders will receive $510,000.

Question

Quizplus · Accepted Answer

Preferred dividends: 1,000,000 * $0.32 = $320,000
Preferred shares will receive the dividend in arrears along with their present dividends.The residue amount will go to common shares.

A Company Has Outstanding 9 Million Shares of $2 Par