Question

!!! Apps Home - Intranet E CHAPTER 14 ASSIGNMENT -/1 Question 28 of 50 Bramble Corporation has 3,000 shares of 7%, $110 par value preferred stock outstanding at December 31, 2020. At December 31, 2020, the company declared a $130,000 cash dividend. Determine the dividend paid to preferred stockholders and common stockholders under each of the following scenarios. 1. The preferred stock is noncumulative, and the company has not missed any dividends in previous years. $ The dividend paid to preferred stockholders The dividend paid to common stockholders $ 2. The preferred stock is noncumulative, and the company did not pay a dividend in each of the two previous years. $ The dividend paid to preferred stockholders The dividend paid to common stockholders $ не | 1 V 1 07

Answer 1

1.

Number of preferred shares = 3,000

Par value per preferred share = $110

Preferred dividend rate = 7%

Annual preferred dividends = Number of preferred shares x Par value per preferred share x Preferred dividend rate

= 3,000 x 110 x 7%

= $23,100

Total dividend declared = $130,000

Total dividend paid to preferred stockholders = $23,100

Total dividend paid to common stockholders = Total dividend declared - Total dividend paid to preferred stockholders

= 130,000-23,100

= $106,900

2.

Total dividend paid to preferred stockholders = $23,100

Total dividend paid to common stockholders = Total dividend declared - Total dividend paid to preferred stockholders

= 130,000-23,100

= $106,900

3.

Arrears of preferred dividends = Annual preferred dividends x 2

= 23,100 x 2

= $46,200

Total dividend paid to preferred stockholders = Arrears of preferred dividends + Current year dividend

= 46,200+23,100

= $69,300

Total dividend paid to common stockholders = Total dividend declared- Total dividend paid to preferred stockholders

= 130,000-69,300

= $60,700

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