These account balances at December 31 relate to Sportaid Inc. Accounts Payable .

Question

These account balances at December 31 relate to Sportaid Inc. Accounts Payable . $51,400 Preferred Shares, $0.10, Accounts Receivable. 81,450 83,000 shares issued 830,000 Common Shares . . . . .591,000 Retained Earnings Bonds Payable 71,800 12,600 3,300 Notes Receivable If the board of directors declare a dividend of $25,000 on December 31, how much of this total would the common shareholders receive? No other dividends have been declared during the year. A. $25,000 O B. $8,300 OC. $16,700 OD. SO

Explanation / Answer

Preferred Shares:

Number of shares = 83,000
Dividend per share = $0.10

Preferred Stock Dividend = Number of shares * Dividend per share
Preferred Stock Dividend = 83,000 * $0.10
Preferred Stock Dividend = $8,300

Total Dividend = $25,000

Common Stock Dividend = Total Dividend - Preferred Stock Dividend
Common Stock Dividend = $25,000 - $8,300
Common Stock Dividend = $16,700

So, common shareholders will receive a dividend of $16,700

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