Sweet Company’s outstanding stock consists of 1,000 shares of noncumulative 5% p
ID: 2579655 • Letter: S
Question
Sweet Company’s outstanding stock consists of 1,000 shares of noncumulative 5% preferred stock with a $100 par value and 10,000 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.
The total amount of dividends paid to preferred and common shareholders over the three-year period is:
Multiple Choice
$15,000 preferred; $25,000 common.
$11,000 preferred; $29,000 common.
$5,000 preferred; $35,000 common.
$12,000 preferred; $28,000 common.
$10,000 preferred; $30,000 common.
Dividend Declared year 1 $ 2,000 year 2 $ 6,000 year 3 $ 32,000Explanation / Answer
Non Cumulative preferred stock dividends does pay any unpaid dividends Preferred Stock Dividend = 100*5%*1000 5000 preferred Common total Stock Stock Year 1 2,000 2,000 year 2 5,000 1,000 6,000 Year 3 5,000 27000 32,000 total 12,000 28000 Answer $12,000 preferred;$28,000 common
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