Sweet Company’s outstanding stock consists of 1,300 shares of cumulative 5% preferred stock with a $100...

Sweet Company’s outstanding stock consists of 1,300 shares of cumulative 5% preferred stock with a $100 par value and 10,300 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

	Dividends Declared & Paid
Year 1	$	2,300
Year 2	$	6,300
Year 3	$	33,500

The total amount of dividends paid to preferred and common shareholders over the three-year period is:

Expert Solution

*solution:*

Annual preferred dividend = 1300$1005%
= $6500

year	Total Cash Dividend Paid	Paid to Preferred	arrears of prefered dividend	common stock dividend

1		2300		2300	6500-2300=4200		0
2		6300		6300	(6500-6300)+4200=4400	0
3		33500		6500+4400=10900	0	33500-10900=22600


Total amount paid to preferred stock over the 3 years = $2300+$6300+$10900=$19500
total dividend paid to common stock over the 3 years = $22600

ekkarill92 answered 2 years ago

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