Frostbite Cold Storage Company was incorporated early in 2007 Since then, the fo

Question

Frostbite Cold Storage Company was incorporated early in 2007 Since then, the following stock has been outstanding:

Preferred stock, 5%, $25 par 8,000 shares
Common stock, $20 par 10,000 shares

On December 31, 2009, the company declared and paid a total of $50,000 in dividends. This was the first dividend declared by the business. That is, until this date no dividends had been declared or paid during the first two years of operations.

If the preferred stock is cumulative, what is the most that will be available out of the $50,000 dividend for payment to the COMMON shareholders?

$50,000
$42,500
$30,000
$20,000

Explanation / Answer

Ans: $ 20,000 8000*25*3*5/100 Preferred stock dividends = 30000 Dividends for common stock holders = 50000-30000 = 20000

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.