1. Amelia Corporation has the following information in its financial statement:
ID: 2444570 • Letter: 1
Question
1. Amelia Corporation has the following information in its financial statement:
Preferred Stock 6% $100 par. Cumulative 10,000 shares authorized
$540,000
Common Stock $2 par 400,000 shares authorized, 320,000 issued
640,000
Paid-in Capital - Common
760,000
Paid-in Capital - Preferred
2,560,000
Retained Earnings
2,373,400
Refer to the information above. If Amelia paid a total of $75,000 in dividends, how much would each common stockholder receive for each share of stock owned? (Assume there are no dividends in arrears)
A.
$0.23
B.
$0.13
C.
$0.18
D.
$0.08
Preferred Stock 6% $100 par. Cumulative 10,000 shares authorized
$540,000
Common Stock $2 par 400,000 shares authorized, 320,000 issued
640,000
Paid-in Capital - Common
760,000
Paid-in Capital - Preferred
2,560,000
Retained Earnings
2,373,400
Explanation / Answer
As given above ' total' dividend amount is $75,000. Amelia has both stocks, Preferred stock & common as well.
Dividend on Pref. Stock is $540,000 * 6% + 540,000(6/100) + $ 32,400.
Hence dividend amount left for common stock holders will be $75,000 less $ 32,000 = $ 42,600.
Now the left amount of $ 42,600 shall be paid to comon stock holders equally on issued figure.
Isssued common stock is given as 320,000 in number.
Hence dividend to per common stock will be = Total dividend paid to common stock holders divided by number of common stock issued.
Divedend to common stock holder = 42,600/320,000 = $ 0.1332 per common stock.
As such option B is correct, which showing value $0.13 for each common stock.
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