Question
In: Accounting
Anders, Inc., has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 40,000 shares...
Anders, Inc., has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 40,000 shares of $1 par value common stock outstanding on December 31, 2018. There were no dividends declared in 2016. The board of directors declares and pays dividends of $90,000 each in 2017 and in 2018. What is the dividends per share received by the common stockholders in 2018?
Group of answer choices
$1.00
$1.25
$0.75
$1.75
Solutions
Expert Solution
Number of preferred share = 10,000
Par value of 1 preferred share = $100
Preferred dividend rate = 5%
Annual preferred dividends = Number of preferred share x Par value of 1 preferred share x Preferred dividend rate
= 10,000 x 100 x 5%
= $50,000
| Year | Total dividends | Preferred stockholders | Dividend in arrears | Common stockholders |
| 2,016 | - | - | 50,000 | - |
| 2,017 | 90,000 | 90,000 | 10,000 | - |
| 2,018 | 90,000 | 60,000 | - | 30,000 |
| 180,000 | 150,000 | 30,000 |
Number of common share = 40,000
dividends per share received by the common stockholders in 2018 =Dividend to common stockholders / Number of common share
= 30,000/40,000
= $0.75
Third option is correct
ekkarill92 answered 2 years agoRelated Solutions
Anders, Inc., has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 40,000 shares...
Anders, Inc., has 10,000 shares of 5%, $100 par value,
cumulative preferred stock and 40,000 shares of $1 par value common
stock outstanding on December 31, 2018. There were no dividends
declared in 2016. The board of directors declares and pays
dividends of $90,000 each in 2017 and in 2018. What is the
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Group of answer choices
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