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    Dividends on Preferred Shares

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    A corporation has 100,000 shares of 7 percent cumulative preferred stock and 40,000 shares of common stock outstanding.Par value for each is $10. no dividends were paid last year, but this year a $150,000 dividend is paid.

    a) how much of this $150,000 goes to the holders of preferred stock?

    b)Assume the same facts as in Question 7, except that the preferred stock is non-cumulative.how much of the $150,000 now goes to the holders of the common stock?

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    https://brainmass.com/business/accounting-for-corporations/dividends-on-preferred-shares-458787

    Solution Preview

    Answers are in the attached file:
    A corporation has 100,000 shares of 7 percent cumulative preferred stock and 40,000 shares of common stock outstanding.Par value for each is $10. no dividends were paid last year, but this year a $150,000 dividend is paid.

    a) how much of this $150,000 goes to the holders of preferred stock?

    # of Preferred shares= 100,000
    Par value of Preferred shares= $10.00
    Dividend (per share) on preferred shares @ 7% = $0.70 =7.% x ...

    Solution Summary

    Amount of dividends to preferred share holders has been calculated.

    $2.19