Question

The following information is provided for Slickers, Inc. for year 2019:
Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding
Common stock, $100 par value, 2,000 shares issued and outstanding
Dividends in arrears for 2017 and 2018 • Total dividends declared and paid during 2019 totaled $25,000
How much of the dividend was paid to the preferred stockholders during 2019 assuming the preferred stock is noncumulative?

Answer 1

Answer:

$3,500

Explanation:

If the preferred stock is non-cumulative we only need to calculate dividends for the year they were paid, that is 2019.

For 2019,

Dividend payable for Preferred stock = (50 * 1000) * 0.07 = $3,500

Out of a total payment of $25,000 only $3,500 is payable for preferred stock for the year 2019. If these were cumulative, 3,500 for 3 years would have been payable.

Hope that help.