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Accounting - Dividends and Stock Outstanding

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Could you please help me with the following question:

A corporation had the following stock outstanding when the company's board of directors declared a $95,000 cash dividend the current year:

Preferred stock, $100 par, 6%, 5,000 shares issued $ 500,000
Common stock, $10 par, 75,000 shares issued $ 750,000
Total $ 1,250,000

Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is cumulative and nonparticipating and dividends are one year in arrears.

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Solution Summary

This solution explains how to allocate the cash dividend between the preferred and common stockholders in Excel for a given set of stock values.

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Dear student,

** Please see the attached file for the complete, Excel formatted solution **

Total amount of cash dividend declared in the current year: $95,000
Less:
Preferred dividend
$6 per share on 5000 shares of preferred stock ...

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