Question

View Policies Current Attempt in Progress The stockholders' equity section of Lemay Corporation shows the following on December 31, 2018: Preferred stock-5%, $100 par, 5,100 shares outstanding $510,000 Common stock-$10 par, 62,000 shares outstanding 620,000 Paid-in capital in excess of par 200,000 Retained earnings 104,600 Total stockholders' equity $1,434,600 Assuming that all of the company's retained earnings are to be paid out in dividends on 12/31/18 and that preferred dividends were last paid on 12/31/16, show how much the preferred and common stockholders should receive if the preferred stock is cumulative and fully participating Preferred stockholders $ Common stockholders $

Answer 1

The dividend received by preferred stockholders and common atockholders is shown below:

Common stockholders Last year dividend Current year dividend Remaining balance of dividend available(104,600-25,500-25,500-31,000)=$22,600 Total dividend paid Preferred stockholders $25,500 (510,000*5%) $25,500 (510,000*5%) $10,200 (22,600*510,000/1,130,000) $61,200 $31,000 $12,400 $43,400 (620,000*5%) (22,600*620,000/1,130,000)