Durden Co. has $10 par value, 10% cumulative preferred stock. There are 10,000 s

Question

Durden Co. has $10 par value, 10% cumulative preferred stock. There are 10,000 shares issued and outstanding of the preferred stock. The company also has 100,000 shares of $1 par value common stock. No dividends had been paid in the years 2003, 2004, 2005, and 2006. In 2007, the company paid $45,000 in dividends. In 2008, the company paid $55,000 in dividends. Determine the allocation of dividends between preferred and common stockholders for 2007 and 2008. Year Preferred Stock Common Stock 2007 2008 Totals

Explanation / Answer

2007: $4,500 preferred dividends $40,500 common Total: $45,000 2008: $5,500 preferred dividends $49,500 common Total: $55,000

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