### Jim Corporation Dividend DistributionJim Corporation pays its cumulative preferred stockholders $1.60 per share. Jim has 30,000 shares of preferred and 75,000 shares of common. In 2021, 2022, and 2023, due to slowdowns in the economy, Jim paid no dividends. Now in 2024, the board of directors decided to pay out $500,000 in dividends.**How much of the $500,000 does each class of stock receive as dividends?**#### Dividend Distribution Table| Class of Stock | Dividends ||------------------|---------------|| Preferred stock | || Common stock | |### Analysis- **Preferred Stock Calculation:** - With 30,000 preferred shares, the annual dividend owed is 30,000 shares × $1.60/share = $48,000. - Since no dividends were paid for three years, the arrears are $48,000/year × 3 years = $144,000. - Therefore, $144,000 of the $500,000 must be paid towards the preferred dividend arrears.- **Remaining Amount for Common Stock:** - After paying the preferred dividends, the remaining amount for distribution is $500,000 - $144,000 = $356,000.The preferred stockholders are prioritized, receiving their arrears first, while the remainder is distributed among the common stockholders.

Lets understand the basics.Shares are mainly divided into two type of activities which are,(1)…

Answered: Jim Corporation pays its cumulative…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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