Stockable, Inc. began business on January 1, 2018 by issuing 100,000 shares of $

Question

Stockable, Inc. began business on January 1, 2018 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of 6%, noncumulative, $100 par value preferred stock. No dividends were declared in 2018. In 2019, Stockable declared and paid a $0.50 dividend to its common stockholders. Which of the following is true? Screen Shot 18-03.. .6.02 AM Click the answer you think is right. If there are enough dividends remaining after the common stockholders receive $0.50 per share, the preferred stockholders will be paid. A liability for dividends owed to preferred stockholders must be recorded in 2018. Stockable, Inc. has no legal obligation to pay a dividend to preferred stockholders Screen Shot 18-03-9.13 AM in 2018. Screen Shot 18-03.. .4.17 AM Read about this Do you know the answer? Think so No idea I know it Screen Shot Screen Shot 4 items left

Explanation / Answer

Answer is Stockable INc has no legal obligation to pay a dividend to preferred stockholders in 2018.

Explanation:

Aas prefered share issued are Non cumulative in nature, this means the company will pay dividend in the year in whichh it earns the profit. however, the year in which the losses incurred and no preferred dividend is paid, then the company is having no liability to pay the previous dividend in the coming years in whcih the profits are earned.

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