Sweet Company\'s outstanding stock consists of 1,100 shares of noncumulative 4%

Question

Sweet Company's outstanding stock consists of 1,100 shares of noncumulative 4% preferred stock with a $100 par value and 10,100 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and pald the following total cash divMdends. Dividend Declared year 2,10e year 2 6,200 year 3 32,50e The total amount of diMdends pald to preferred and common shareholders over the three-year perlod Is: Multiple Choice $13,200 preferred; $27600 common. 0 $10.600 preferred; $30.200 common. O sa400 preferred S3640common. $10.900 preferred; $29,900 common. $8,800 preferred; $32000 common.

Explanation / Answer

Solution - (d) Calculation of Preferred Dividend and dividend on common stock

Total Preferred Stock = 1100 Shares @ $100 = $110000

$2100

($110000*4%)

$4400

($110000*4%)

$4400

($110000*4%)

Year Total Dividend Preferred Dividend Common Stock Dividend 1 $2100

$2100

($110000*4%)

$0 2 $6200

$4400

($110000*4%)

$1800 3 $32500

$4400

($110000*4%)

$28100 Total $40800 $10900 $29900

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