Question

Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2018. There were no dividends declared in 2017. The board of directors declares and pays a $250,000 dividend in 2018. What is the amount of dividends received by the common stockholders in 2018? $0 $150,000 $250,000 $100,000

Answer 1

Answer:

$100000

Explanation:

Given: Total Dividend paid= $250000.

           Preferred stock is 25000 shares of 6%, $100 par value.

First, lets calculate preferred stock.

Preferred stock= $[25000\times \ 100\times 6%]$

∴ Preferred stock= $150000

Now, calculating the amount of dividends received by common stockholder.

Dividend received by stockholder= $(Total\ Dividend\ paid \ by \ company - preferred\ dividend)$

Common stockholder´s dividend= ($(250000-150000)= \ 100000$

∴ Common stockholder´s dividend is $100000.