The shareholders’ equity of Tru Corporation includes $520,000 of $1 par common s

Question

The shareholders’ equity of Tru Corporation includes $520,000 of $1 par common stock and $1,120,000 par value of 7% cumulative preferred stock. The board of directors of Tru declared cash dividends of $142,000 in 2016 after paying $52,000 cash dividends in each of 2015 and 2014.

The shareholders’ equity of Tru Corporation includes $520,000 of $1 par common stock and $1,120,000 par value of 7% cumulative preferred stock. The board of directors of Tru declared cash dividends of $142,000 in 2016 after paying $52,000 cash dividends in each of 2015 and 2014.

Required: What is the amount of dividends common shareholders will receive in 2016?

Explanation / Answer

Preferred Stock             1,120,000 rate 7% Dividend per year for Preferred Stock                  78,400 Dividend for 2014 & 2015 for preferred Stoc (78400*2)                156,800 Less: Dividend Paid (52000*2)                104,000 Balance Dividend to be paid for 2014 & 2015                  52,800 Add: Dividend for 2016                  78,400 Total Dividend payble for preferred Stock                131,200 Total Dividend Declared in 2016 142000 Dividend receive by Common Stcok hlders in 2016 (142000-)                  10,800

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