PHSS, Inc. issues 15,000 shares of 4%, $100 par value preferred stock at the beginning of 20X1. All remaining shares are common stock. PHSS was not able to pay dividends in 20X1, but plans to pay dividends of $120,000 in 20X2. Assuming the preferred stock is cumulative, how much of the $120,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 20X2? Select one: a. $80,000 to preferred stockholders and $40,000 to common stockholders b. $120,000 to preferred stockholders and $0 to common stockholders c. $15,000 to preferred stockholders and $105,000 to common stockholders d. $60,000 to preferred stockholders and $60,000 to common stockholders. e. $40,000 to preferred stockholders and $80,000 to common stockholders
PHSS, Inc. issues 15,000 shares of 4%, $100 par value preferred stock at the beginning of 20X1. All remaining shares are common stock. PHSS was not able to pay dividends in 20X1, but plans to pay dividends of $120,000 in 20X2.
Assuming the preferred stock is cumulative, how much of the $120,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 20X2?
$80,000 to preferred stockholders and $40,000 to common stockholders
$120,000 to preferred stockholders and $0 to common stockholders
$15,000 to preferred stockholders and $105,000 to common stockholders
$60,000 to preferred stockholders and $60,000 to common stockholders.
$40,000 to preferred stockholders and $80,000 to common stockholders
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
