Question

Chapter 11 Problems i Saved Required information [The following information applies to the questions displayed below. Part 4 of 4 Raphael Corporation's balance sheet shows the following stockholders' equity section. 1.74 points $ 70,000 Preferred stock-5% cumulative, $__ par value, 1,000 shares authorized, issued, and outstanding Common stock-$_par value, 4,000 shares authorized, issued, and outstanding Retained earnings Total stockholders' equity 120,000 340,000 $ 530,000 eBook Print 4. If two years' preferred dividends are in arrears at the current date and the board of directors declares cash dividends of $23,800, what total amount will be paid to the preferred and to the common shareholders? Total amount paid to the preferred shareholders Total amount paid to the common shareholders

Answer 1

Corporation's Preferred stock (par value) = $70,000

Preferred dividend = Preferred stock par value * interest rate

Preferred dividend = $70,000 * 5% = $3,500

Preferred dividend in the current year= $3,500

Add: Arrears in preferred dividend ($3,500 *2) = $7,000

Total Preferred Dividend = $10,500

Common Dividend = $23,800 - $10,500

Common Dividend = $13,300

Total amount paid to the Preferred shareholders = $10,500

Total amount paid to the Common shareholders = $13,300