Question

Renoir Associates has declared a​ $49,000 cash dividend to shareholders. The company has​ 4,000 shares of ​$16​par, ​6% preferred stock and​ 11,000 shares of ​$16par common stock. The preferred stock is noncumulative. How much will be distributed to the preferred and common stockholders on the date of​ payment?

Answer 1

Answer:

Preferred stock dividend is paid our before common dividends are paid out. Preferred dividends are;

= 4,000 * 16 * 6%

= $‭3,840‬

Common Stock Dividends

= 49,000 - ‭3,840‬

= $‭45,160‬