Question

Exercise 11-7A (Algo) Cash dividends for preferred and common shareholders LO 11-3 Weaver Corporation had the following stock issued and outstanding at January 1, Year 1. 1.90,000 shares of $12 par common stock. 2. 9,000 shares of $80 par, 4 percent, noncumulative preferred stock. On June 10, Weaver Corporation declared the annual cash dividend on its 9,000 shares of preferred stock and a $1 per share dividend for the common shareholders. The dividends will be paid on July 1 to the shareholders of record on June 20. Required Determine the total amount of dividends to be paid to the preferred shareholders and common shareholders. Preferred stock Common stock

Answer 1

Par value per preferred share = $80

Preferred dividend rate = 4%

Dividend per preferred share = Par value per preferred share x Preferred dividend rate

= 80 x 4%

= $3.20

Number of preferred share = 9,000

Dividend paid to preferred stockholder = Number of preferred share x Dividend per preferred share

= 9,000 x 3.20

= $28,800

Dividend per common share = $1

Number of common share = 90,000

Dividend paid to common stockholders = Number of common share x Dividend per common share

= 90,000 x 1

= $90,000

Preferred stock	$28,800
Common stock	$90,000