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newconnect.mheducation.com ESPN Yahoo! gold-soul.la women's swi... shophearts iCloud Job Description Bing Yahoo Google Wikipedia ter 18 Quiz Louie Company Has A Defined Benefit Pensi... Ortega Inc has a defined benefit pensis Quiz Saved Help Save & Exit Submit At the beginning of 2016, Emily Corporation issued 29,000 shares of SOO par, 6%, cumulative, preferred stock per share. No dividends have been paid to preferred or common shareholders. What amount of dividends willa preferred shareholder owning 100 shares receive in 2018 if Emily pays $1,000,000 in dividends? so Multiple Choice $1.740 $29.000 1980 $1800 OD F

Explanation / Answer

$ 1,800

Working:

Dividend to preferred stockholders = Number of shares x Par Value x Dividend rate = 100 x $        100 x 6% = $        600 Dividend for last 2 years in arrear and current year (Total 3 years) = $        600 x 3 = $    1,800 Preferred stockholders are having prefrential right of receiving dividend prior to common stockholders. Cumulative preferred stockholders means stockholders have right to receive dividends of past years in arrear out of current year's dividend. So, in the year of 2018, first of all preferred stockholders will recive last 2 year's dividend that was unpaid and also current year's before any amount of dividend goes to common stockholders.

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