The Raspberry Company has 300,000 of ordinary $2 par shares outstanding, along w

Question

The Raspberry Company has 300,000 of ordinary $2 par shares outstanding, along with 60,000 of no-par 8% preferred shares with a stated value of $5. This means that preferred shares are entitled to $24,000 annual dividend These preferred shares are cumulative and non- participating. Dividends have been paid in every year, except for the past 2 years and the current year. Assuming that $63,000 will be distributed as a dividend in the current year, how much will the ordinary shareholders receive? Select one: a. $63,000 O b. $48,000 Oc. $21,000 O d. $24,000

Explanation / Answer

SInce the Company has not paid the preferred dividend for the last two years and the current year ,it has to pay them before paying the annual dividend. Since, the question states that the company is paying the annual dividend of $63,000 , it is assumed that the company has paid the Preferred dividend and so , the entire Annueal dividend is paid to the ordinary shareholders.

Answer is a.$63,000

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