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Coronado Industries, has 16000 shares of 4%, $100 par value, cumulative preferred stock and 61000 shares...

Coronado Industries, has 16000 shares of 4%, $100 par value, cumulative preferred stock and 61000 shares of $1 par value common stock outstanding at December 31, 2021. There were no dividends declared in 2019. The board of directors declares and pays a $108000 dividend in 2020 and in 2021. What is the amount of dividends received by the common stockholders in 2021?

A

 $0

B

 $24000

C

 $108000

D

 $64000

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Expert Solution

Answer B. $24,000

Since cumulative preference shareholders get the arrears dividend also, common stockholder will get any dividend, once all outstanding dividend  of cumulative preference shareholders are settled.

Since in 2019 company has not paid any dividend, one year preference shares dividend would be outstanding.

Yearly dividend on Preference shares :-

A. No of Preference Shares 16000
B. Par value $100
C. Total paid up (A*B) $1,600,000
D. Rate of dividend 4%
E. Dividend ( Yearly) (C*D) $64,000

Year 2019 Dividend Outstanding for Preference shareholders - $64,000

Year 2020 Dividend Outstanding for Preference shareholders -   $20,000

A. Dividend Paid in year 2020 $108,000
B. Preference shares dividend outstanding for 2019 $64,000
C. Amount available for year 2021 (A-B) $44,000
D. Yearly preference shares dividend $64,000
E. Preference shares dividend outstanding 2020 (C-D) $20,000

Year 2021 Dividend Outstanding for Preference shareholders - NILL

A. Dividend Paid in year 2021 $108,000
B. Preference shares Dividend outstanding for year 2020 $20,000
C. Amount available for year 2021 (A-B) $88,000
D. Preference shares Dividend outstanding for year 2021 $64,000
E. Remaining amount available for common Stockholders share (C-D) $24,000

ekkarill92 answered 2 years ago
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