Question

Nathan's Athletic Apparel has 2,000 shares of 6%, $100 par value preferred stock the company issued at the beginning of 2017. All remaining shares are common stock. The company was not able to pay dividends in 2017, but plans to pay dividends of $25,000 in 2018. Required: 1. & 2. Assuming the preferred stock is cumulative and noncumulative, how much of the $25,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2018? Non Cumulative Preferred dividends for 2018 Preferred dividends in arrears for 2017 Remaining dividends to common stockholdersi Total dividends Cumulative $ 12,000 12,000 1,0001 $ 25,000 13,000 13,000 $

Answer 1

Answer: Dividend to be paid to preferred st = (2000x1004) x 67. = $12000 Cumelative a particulars Nov Cunulative preferred dividends for 2018 $12000 $12000 (*) preferred dividends in armean of 2017 $12000 Renaining dividendi to Commen $ 1930 $13.000 SH $2.5000 425000 $ 2500c 25000 of declared (*) If non-cumulative, thers to be paid in the year ie, for the year of 2018. in the content problem. Thanks