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1. Amelia Corporation has the following information in its financial statement:

ID: 2444570 • Letter: 1

Question

1.        Amelia Corporation has the following information in its financial statement:

Preferred Stock 6% $100 par. Cumulative 10,000 shares authorized

$540,000

Common Stock $2 par 400,000 shares authorized, 320,000 issued

640,000

Paid-in Capital - Common

760,000

Paid-in Capital - Preferred

2,560,000

Retained Earnings

2,373,400

Refer to the information above. If Amelia paid a total of $75,000 in dividends, how much would each common stockholder receive for each share of stock owned? (Assume there are no dividends in arrears)

A.

$0.23

B.

$0.13

C.

$0.18

D.

$0.08

Preferred Stock 6% $100 par. Cumulative 10,000 shares authorized

$540,000

Common Stock $2 par 400,000 shares authorized, 320,000 issued

640,000

Paid-in Capital - Common

760,000

Paid-in Capital - Preferred

2,560,000

Retained Earnings

2,373,400

Explanation / Answer

As given above ' total' dividend amount is $75,000. Amelia has both stocks, Preferred stock & common as well.

Dividend on Pref. Stock is $540,000 * 6% + 540,000(6/100) + $ 32,400.

Hence dividend amount left for common stock holders will be $75,000 less $ 32,000 = $ 42,600.

Now the left amount of $ 42,600 shall be paid to comon stock holders equally on issued figure.

Isssued common stock is given as 320,000 in number.

Hence dividend to per common stock will be = Total dividend paid to common stock holders divided by number of common stock issued.

Divedend to common stock holder = 42,600/320,000 = $ 0.1332 per common stock.

As such option B is correct, which showing value $0.13 for each common stock.