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Dividends: Preferred Stock Holders

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A company has the following outstanding stock at the end of both 20X7 and 20X8
- Preferred stock (6%, $100 par value, 1000 shares issued and outstanding)
- Common stock ($1 par value, 200,000 shares issued and outstanding)
No dividends were declared or paid 20X7

If the company's preferred stock is NON CUMULATIVE and the 20X8 dividend declared amounts to a total of $20,000, how much will go to PREFERRED stock holders?

A) 6000
B) 8000
C) 12000
D) 14000
E) 20000

If the company's preferred stock is CUMULATIVE and 20X7 dividends are the only dividends in arrears, what portion of the 20X8 dividend declaration of $20,000 will go to the COMMON stock holders?

a) 6000
b) 8000
c) 12000
d) 14000
e) 20000

Solution Preview

If the company's preferred stock is NON CUMULATIVE and the 20X8 dividend declared amounts to a total of $20,000, how much will go to PREFERED stock holders?

Answer - (a) 6000

Dividend on Preferred stock for ...

Solution Summary

This solutions contains explanations and calculations for dividends within the context of preferred stock holders.

$2.19