The shareholders\' equity of Green Corporation includes $266,000 of $1 par commo
ID: 2485551 • Letter: T
Question
The shareholders' equity of Green Corporation includes $266,000 of $1 par common stock and $460,000 par value of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $56,000 in 2016 after paying $26,000 cash dividends in each of 2015 and 2014. What is the amount of dividends common shareholders will receive in 2016?
$11,400.
$38,400.
$23,800.
$44,600.
The shareholders' equity of Green Corporation includes $266,000 of $1 par common stock and $460,000 par value of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $56,000 in 2016 after paying $26,000 cash dividends in each of 2015 and 2014. What is the amount of dividends common shareholders will receive in 2016?
Explanation / Answer
As preferred stock is cumulative so first they will be paid for the previous years if unpaid and the current year 7%*460000 32200 Amount of dividend to be paid to cumulative Preferred Stock in 2016 2014 (32200-26000) 6200 2015 (32200-26000) 6200 2016 32200 Total dividend to be paid 44600 Amount of dividend to commom shareholders $56000-44600 11400 Ans is $11400
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