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Safari File Edit View History Window Help newconnect.mheducation.com li Apple Disney ESPN Yahoo! gold-soul la women's sw....s.hophearts Cloud Job Description Bing Yahoo Google Wikipec Ortega Inc. has a defined benefit pension plan. On Decembe Chapter 18 Quiz Saved Help Save &Exit; Submit The shareholders' equity of Green Corporation includes $210,000 of $1 par common stock and $410,000 par of 7% cumulative preferred stock is the amount of dividends common shareholders will receive in 2018? Multiple Choice $6.900 O $36.400 $22300 O $44100Explanation / Answer
Answer 1.) $6,900 (option a)
Explanation :
Preferred Stock dividends per year = $410,000 * 7 % = $28,700
Dividends in arrears on preferred stock for 2016 = $28,700 - $21,000 = $7,700
Dividends in arrears on preferred stock for 2017 = $28,700 - $21,000 = $7,700
Total dividends Preferred Stockholders will receive in 2018 :
= Dividends for 2018 + Total dividends in arrears on preferred stock
= $28,700 + $7,700 +$7,700 = $44,100
Total dividends Common Stockholders will receive in 2018 :
= Total cash dividends declare - Dividends for Preferred Stockholders
= $51,000 - $44,100 = $6,900
Answer 2 ) $15.00 ,$7.80 (option a)
Explanation :
Preferred Stock dividends per year = 19,000 shs *$100 * 5 % = $95,000
Dividends in arrears on preferred stock for last 2 years = $95,000 * 2 = $190,000
Total dividends payable to Preferred Stockholders in current year :
Dividends for current year + Total dividends in arrears on preferred stock
= $95,000 + $190,000 = $285,000
Dividends per share payable to Preferred Stockholders :
= $285,000 / 19,000 shares = $15 .00
Total dividends payable to Common Stockholders in current year :
= Total cash dividends declare - Dividends for Preferred Stockholders
= $480,000 - $285,000 = $195,000
Dividends per share payable to Common Stockholders :
= $195,000 / 25,000 shares = $7.80
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