Hello, A corporation was incorporated on Jan. 1, 2016 and issued the following stock for cash. 2,600,000 shares of no par common stock were authorized, 345,000 shares were issued on Jan 1, 2016, at $33 per share. 431,000 shares of $110 par value 9.7% cumulative preferred stock were authorized and 134,000 shares were issued on Jan 1, 2016, at $137 per share. Net income for the years ending Dec 31, 2016, 2017, and 2018 was $4.980M, $8,490M, and 9.100M respectively. No dividends were declared or paid in 2016 and 2017. However, on Dec 17, 2018, the Board of Directors declared dividends of $5,570,000 payable on Feb 9, 2019, to holders of record on Jan 4, 2019. Of the total amount of dividends declared during 2018, how much will be received by preferred stockholders. Thank you.
Hello,
A corporation was incorporated on Jan. 1, 2016 and issued the following stock for cash.
2,600,000 shares of no par common stock were authorized, 345,000 shares were issued on Jan 1, 2016, at $33 per share.
431,000 shares of $110 par value 9.7% cumulative
Net income for the years ending Dec 31, 2016, 2017, and 2018 was $4.980M, $8,490M, and 9.100M respectively.
No dividends were declared or paid in 2016 and 2017. However, on Dec 17, 2018, the Board of Directors declared dividends of $5,570,000 payable on Feb 9, 2019, to holders of record on Jan 4, 2019.
Of the total amount of dividends declared during 2018, how much will be received by preferred stockholders.
Thank you.
Step1: Calculating the dividend amount for the preferred stock in the year 2016. We have,
Dividend amount = Number of preferred stock x Face value x Percentage of dividend
Dividend amount = 134,000 x $ 110 x 9.7 %
Dividend amount = $ 1,429,780
Step2: Calculating the dividend amount for the preferred stock in the year 2017. We have,
Dividend amount = Number of preferred stock x Face value x Percentage of dividend
Dividend amount = 134,000 x $ 110 x 9.7 %
Dividend amount = $ 1,429,780
Step by step
Solved in 4 steps
