McBean Company has outstanding 2.1 million shares of $3 par value common stock a

Question

McBean Company has outstanding 2.1 million shares of $3 par value common stock and 2.1 million shares of $5 par value preferred stock The preferred stock has a 8% dividend rate The company declares $ 12,600, 000 in total dividends for the year. Preferred Dividends in arrears are $630, 000. Compute the amount of dividends to be distributed to preferred shareholders. (Enter your answer in dollars and not in millions.) Compute the amount of dividends to be distributed to common shareholders. (Enter your answer in dollars and not in millions.)

Explanation / Answer

a) The amount of dividend to be distributed to Preferred shareholders = 2100000(NOTE 1) * 5 * 8 % = $ 840000

b) The amount of dividend to be distributed to Common shareholders = 12600000 - 840000 = $ 11760000

(NOTE 1):- Number of preferred shares outstanding = 2.1 * 1000000 = 2100000. [ 1 Million = $ 1000000]

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