Question

Concord Corporation has 5400 shares of 6%, $50 par value, cumulative preferred stock and 108000 shares of $1 par value common stock outstanding at December 31, 2020, and December 31, 2019. The board of directors declared and paid a $14000 dividend in 2019. In 2020, $70000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2020?

Answer 1

Answer:

$18,400

Explanation:

For computing the preferred dividend, first we have to find out the yearly dividend which is shown below:

= Number of shares × par value per share × dividend rate

= 5,400 shares × $50 × 6%

= $16,200

In 2019, the dividend was paid of $14,000

Remaining dividend left is $16,200 - $14,000 = $2,200

So, the total preference dividend in 2019 would be

= Yearly dividend + remaining dividend left

= $16,200 + $2,200

= $18,400