C O ezto.mheducation.com/hm.tpx connect. Ch. 18 Test Question 3 10.00 points MC

Question

C O ezto.mheducation.com/hm.tpx connect. Ch. 18 Test Question 3 10.00 points MC Qu. 55 LO 18-03, 18-07 The shareholders' equity of Green.. The shareholders' equity of Green Corporation inckides $244000 of $1 par common stock and $440,000 par vale of 6% cumulative preferred stock. The board af directors of Green declared cash dividends of $54,000 in 2016 after paying $24,000 cash dividends in each of 2015 and 2014 What is the amount of dividends common shareholders will recetwe in 2016? O $22.800 O $31.200 s28800 O $27600 Muitiple Cholce MG au 55 LO 18-03, 18-07 The shareholders equity of Greer TOSHIBA esc 2 3 4 5

Explanation / Answer

The Answer is $22,800

Green's common shareholders will receive dividends of $22,800 as a result of the 2016 distribution.

                                               Preferred Common

2014                                        $24,000*              0

2015                                        24,000**               0

2016                                       31200***               $22,800(remainder)

* $26400 current preference ($440,000 x 6%), thus $2400 dividends in arrears

.** $26400 current preference ($440,000 x 6%), thus another $2400 dividends in arrears.

*** $4800 dividends in arrears plus the $26400 current preference.

$22,800 = $54000 - $31,200

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