Stella Corporation had the following shares of stock issued and outstanding on D

Question

Stella Corporation had the following shares of stock issued and outstanding on December 31, 2009. Common Stock $10 par value, 50,000 shares issued in outstanding, preferred stock 8%, $50 par value, cumulative, 6,000 shares issued an outstanding. Dividends were in the arrears for 2007 and 2008. On December 31, 2009, total cash dividends of $105,000 were declared. What are the amounts payable to preferred stockholders and common stockholders? If the cash dividends were $65,000, what are the amounts payable to preferred stockholders and common stockholders? Show computations.

Explanation / Answer

On Dec 31, 2009, total cash dividends of $95,000 were declared. What are the amounts payable to preferred stockholders and common stockholders? Preferred stock holders = 50*6000*8%*3 = 72000 common stock holders = 95000-72000 = $23000 If the cash dividends were $70,000 what are the amounts payable to preferred stockholders and common stockholders? Preferred stock holders = 50*6000*8%*2 = 48000 balane money not distirbuted as dividendss

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