Question

Prime Company began operations in January, 2019, by issuing 5,700 shares
of 9%, cumulative, $65 par value preferred stock and 25,000 shares of $8
par value common stock. Prime Company paid $26,000 of dividends in 2019,
they paid $35,000 of dividends in 2020, they paid $38,000 of dividends
in 2021, they paid $24,000 of dividends in 2022, and they paid dividends
of $50,000 in 2023.

Calculate the amount of the $50,000 dividend paid in 2023 that was paid
to common stockholders.

Answer 1

Preferred Stock: Par Value per share = $65.00 Dividend Rate = 9.00% Number of Shares = 5,700 Annual Dividend = Par Value per share * Dividend Rate * Number of shares Annual Dividend = $65.00 * 9.00% * 5,700 Annual Dividend = $33,345 Total Cash Dividend Paid Paid to Preferred Paid to Common 2019 2020 2021 2022 2023 Total 0 26000 35000 38000 24000 50000 173000 Dividends in Arrears at year end 7345 5690 1035 10380 0 26000 35000 38000 24000 43725 166725 6275 6275 So, dividend paid to common stockholders amounted to $6,275