8% preferred stock, $20 par value, cumulative, 10,000 shares $ 150,000 authorize

Question

8% preferred stock, $20 par value, cumulative, 10,000 shares $ 150,000 authorized, 7,500 shares issue d Common stock, $10 par value, 1,000,000 shares authorized, 9,750,000 30,000 13,500,000 3,750,000 315,000 975,000 shares issued, 960,000 shares outstanding Paid-in capital in excess of par-preferred stock Pad-in capital in excess of par--commón stock Retaine d earnings Treasury stock (15,000 shares) Vega Corporation's December 31, 2013 balance sheet showed the following: Vega declared and paid a $48,000 cash dividend on December 15, 2013. If the company's dividends in arrears prior to that date were $10,000, Vega's common stockholders received $38,000. $22,000 $26.000. no dividend.

Explanation / Answer

Dividends in arrears are the dividends payable to cumulative preferred stock holders. These are current liability and should be paid as and when dividends are declared.

Hence, correct option is $38,000. ($48,000-$10,000)

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