1. Cuther Inc., has 1,000 shares of 8%, $50 par value, cumulative preferred stock and 50,000...

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

Solutions

Expert Solution

a. $7,000
Statementshowing Computations
Paticulars	2007	2008
Total Dividend Paid = a	3,000.00	12,000.00
Preference Dividend to be paid = 1000508%	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	-

ekkarill92 answered 1 year ago

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