Question

The Scott Corporation has outstanding 10,000 shares of 10%, $50 par value, cumulative, nonparticipating preferred stock and 80,000 shares of $10 par value common stock. The board of directors voted to distribute $45,000 as dividends in 2017, $65,000 in 2018, and $85,000 in 2019. Compute the amounts below.

1. Total dividend paid to preferred stockholders in 2017.           _____
2. Total dividend paid to common stockholders in 2017.             _____
3. Total dividend paid to preferred stockholders in 2018.          _____
4. Total dividend paid to common stockholders in 2018.            _____
5. Total dividend paid to preferred stockholders in 2019.          ______

Total dividend paid to common stockholders in 2019.   

Answer 1

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The Scott Corporation

Note: Preferred stock is CUMULATIVE so if dividend is not declared then it will be claimed next time when the dividend is declared. Amount will carry forward.

Calculation of preferred stock dividend:	Amount $	Note
Number of preferred stock	10,000.00	A
Par value per share	50.00	B
Total value of Preferred shares outstanding	500,000.00	C=A*B
Dividend rate	10%	D
Preferred Dividend amount	50,000.00	E=C*D
Year 2017	Amount $
Total dividends declared	45,000.00	F
Preferred dividends	45,000.00	G=F
Preferred dividend carried forward in 2018	5,000.00	H=E-G
Common dividends	-	I=F-G
Year 2018	Amount $
Total dividends declared	65,000.00	J
Preferred dividend of 2017 carried forward in 2018	5,000.00	See H
Preferred dividends in 2018	50,000.00	See E
Total Preferred dividends in 2018	55,000.00	K=H+E
Common dividends	10,000.00	L=J-K
Year 2019	Amount $
Total dividends declared	85,000.00	M
Preferred dividends	50,000.00	See E
Common dividends	35,000.00	N=M-E