Question

Da TH Review 11-01 Bramble Corp. has 2,200 shares of 9%, $102 par value preferred stock outstanding at December 31, 2022. At December 31, 2022, the company dedared a $118,000 cash dividend. Determine the dividend paid to preferred stockholders and common stockholders under each of the flowing 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 ye The dividend paid to preferred stockholders The dividend paid to common stockholders 3. The preferred stock is cumulative, and the company did not pay a dividend in each of the tw The dividend paid to preferred stockholders The dividend paid to common stockholders

Answer 1

1.

Annual preferred dividend = Number of preferred shares x Par value per preferred shares x Dividend rate

= 2,200 x 102 x 9%

= $20,196

Dividend paid to common stockholders = Total dividend paid - Dividend paid to Preferred stockholders

= 118,000 - 20,196

= $97,804

The dividend paid to Preferred stockholders	$20,196
The dividend paid to common stockholders	$97,804

2.

The dividend paid to Preferred stockholders	$20,196
The dividend paid to common stockholders	$97,804

3.

Dividend paid to Preferred stockholders = Current year dividend + Dividend in Arrears

= 20,196 + 20,196 x 2

= 20,196 + 40,392

$60,588

Dividend paid to common stockholders = Total dividend paid - Dividend paid to Preferred stockholders

= 118,000 - 60,588

= $57,412

The dividend paid to Preferred stockholders	$60,588
The dividend paid to common stockholders	$57,412

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