Question 20 The stockholders\' equity section of Lemay Corporation shows the fol

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Question 20 The stockholders' equity section of Lemay Corporation shows the following on December 31, 2018: Preferred stock-5%, $100 par, 4,800 shares outstanding Common stock-$10 par, 59,000 shares outstanding Paid-in capital in excess of par Retained earnings Total stockholders' equity $480,000 590,000 210,000 120,300 $1,400,300 Assuming that all of the company's retained earnings are to be paid out in dividends on 12/31/18 and that preferred dividends were last paid on 12/31/16, show how much the preferred and common stockholders should receive if the preferred stock is cumulative and fully participating. Preferred stockholders Click if you would like to Show Work for this question: Open Show Work d used SAVE FOR LATER

Explanation / Answer

Solution:

Dividend payment to preferred stockholders = Arrerar dividends + current dividend

= ($480,000*5%) + ($480,000*5%) = $48,000

Dividend payment to common stockholders = Total dividend paid - preferred stock dividend

= $120,300 - $48,000 = $72,300

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