Question

The shareholders' equity of Green Corporation includes $376,000 of $1 par common stock and $560,000 par of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $66,000 in 2021 after paying $36,000 cash dividends in each of 2020 and 2019. What is the amount of dividends common shareholders will receive in 2021

Answer 1

Answer:

The amount of dividends common shareholders will receive in 2021 is $20,400

Explanation:

Arrears in Preferred Stock Dividend = (560,000*7%*2 - 36,000 - 36000)

Arrears in Preferred Stock Dividend = 78,400 - 36,000 - 36,000

Arrears in Preferred Stock Dividend = $6,400

Current Preferred Stock Dividend = 560,000 * 7%

Current Preferred Stock Dividend = $39,200

The amount of dividends common shareholders = $66,000 - $39,200 - $6,400

The amount of dividends common shareholders = $20,400