Durden Co. has $10 par value, 12% cumulative preferred stock. There are 10,000 s
ID: 2381777 • Letter: D
Question
Durden Co. has $10 par value, 12% cumulative preferred stock. There are 10,000 shares issued and outstanding of the preferred stock. The company also has 100,000 shares $1 par value common stock. No dividends has been paid in the years 2003,2004,2005, and 2006. In 2007, the company paid $35,000 in dividends. In 2008, the company paid $65,000 in dividends. Determine the allocation of dividends between preferred and common stockholders for 2007 and 2008.
Year
Preffered stock
Common stock
2007
2008
Totals
Year
Preffered stock
Common stock
2007
2008
Totals
Explanation / Answer
As preferred stock are cumulative the preferred stock holders should be paid the error dividend of 2003, 2004,2005,2006. This is; $48,000 ($12,000*4 yeras).
In 2007 $35,000 and in 2008 $13,000 including the dividend of 2008. The remainging will be paid to the common stock holder.
Year
Preffered dividend
Common divident
2007
35,000
0
2008
25,000 (13,000+12,000)
40,000
Total dividend
60,000
40,000
Year
Preffered dividend
Common divident
2007
35,000
0
2008
25,000 (13,000+12,000)
40,000
Total dividend
60,000
40,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.