Question

Chapter 18—1. The shareholders’ equity of MLS Enterprises includes $170 million of no par common stock and $340 million of 5% cumulative preferred stock. The board of directors of MLS declared cash dividends of $46 million in 2018 after paying $11 million cash dividends in both 2017 and 2016.

What is the amount of dividends common shareholders will receive in 2018? (Enter your answers in millions (i.e. 10,000,000 should be entered as10).)

	Par Value Preferred Stock	Dividend Rate(%)	Annual Preferred Dividend
Annual Preferred Dividend
	Total cash dividend paid	Paid to preferred	Paid to common	Dividends in arrears at year-end
2016
2017
2018
Total

Answer 1

Above Question asking about 2018 - Quantum of dividend to pay towards "Common Shareholders "

2016 / 17 company paid dividend but not in full . So current year ( 2018 ) , we add back earlier year Outstanding Dividend not paid amount also .

The shareholders of MLS Enterprise
Common Stock($) Mio	170
Preferred Stock
5% Cumulative Preferred Stock($) Mio	340
cash Dividend 2018 ( $) Mio	46
Dividend paid in 2017 ( $ Mio)	11
Dividend paid in 2016 ( $ Mio)	11
Preferred Stock Dividend
5% on 340 Mio	17
Outstanding in Dividend paid - 2016($ Mio)	6
$ 17 Mio - $ 11 Mio
Outstanding in Dividend paid - 2017($ Mio)	6
$ 17 Mio - $ 11 Mio
Plus : new Dividend accrued
5% on 340 Mio ( $ Mio)	17
Total Dividend pay out($ Mio)-2018	29
cash Dividend 2018 ( $) Mio	46
Balance amount ( $ Mio) towards	17
Common shareholders