In: Accounting
1. Cuther Inc., has 1,000 shares of 8%, $50 par value, cumulative preferred stock and
50,000 shares of $1 par value common stock outstanding at December 31, 2007, and
December 31, 2008. The board of directors declared and paid a $3,000 dividend in 2007.
In 2008, $12,000 of dividends are declared and paid. What are the dividends received by
the common stockholders in 2008?
a. $7,000
c. $5,000
d. $4,000
a. $7,000 | ||
Statementshowing Computations | ||
Paticulars | 2007 | 2008 |
Total Dividend Paid = a | 3,000.00 | 12,000.00 |
Preference Dividend to be paid = 1000*50*8% | 4,000.00 | 4,000.00 |
Preference Dividend Paid = Existing + arrears = b | 3,000.00 | 5,000.00 |
Dividend available for common stock = a-b | - | 7,000.00 |
Arrears of preference Dividend | 1,000.00 | - |