Question

In: Accounting

etermine the total dividends paid to each class for the four years combined.

Question: Use the data in Exercise 11-8 to determine the number of dividends paid each year to each of the two classes of stockholders assuming that the preferred stock is cumulative. Also, determine the total dividends paid to each class for the four years combined.

 

 

Solutions

Expert Solution

Step 1: Definition of Common stock

The company issues stocks to the people having voting rights. They are entitled to dividends and capital repayment after payment to preference shareholders. The common stockholders get a share in the profit after dividends’ distributions.

Step 2: Calculation of dividend paid

 

Total Cash Dividend paid Paid to Preferred Paid to Common Dividends in Arrears at Year-end

2015 $20,000 $20,000 - $10,000

2016 $28,000 $28,000 - $12,000

2017 $200,000 $42,000 $158,000 -

2018 $350,000 $30,000 $320,000 -

TOTAL $598,000 $120,000 $478,000 -

 

Answer:

Total amount of dividend paid to common stockholders is $478,000.

 

Sahil Dangi answered 2 years ago
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