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QS 13-12 Dividend allocation between classes of shareholders LO C2 Stockholders equity of Ernst Company consists of 88,000 s

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Answer #1

Par value per preferred share

Dividend rate

Dividend per preferred share

Number of preferred shares

Preferred dividend for two years

Calculation of preferred dividend

$5

10%

5 x 10% = $0.5

88,000

88,000 x 0.5 x 2 = $88,000

Total cash dividend paid

$165,000

Paid to preferred shareholders

$88,000

Paid to common shareholders

$77,000

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