Homework SourseOn December 31 2015 Alpha Corporation has outstanding 1000 s
On December 31, 2015, Alpha Corporation has outstanding 1,000 shares of $100 par value, 7% cumulative and nonparticipating preferred stock, and 20,000 shares of $10 par value common stock. No dividends were paid in 2014 and 2015. During 2016, Alpha distributed $40,000 in dividends. Use this information to determine for the 2016 the dollar amount of dividends that will be distributed to:
1. Preferred Stock
2. Common Stock
Solution
1. Preferred Stock:
2. Common Stock(2016) = $40,000 - $21,000 = $19,000
| 2014 arrears(1,000 x $100 x 7%) | $7,000 |
| 2015 arrears(1,000 x $100 x 7%) | $7,000 |
| 2016 (1,000 x $100 x 7%) | $7,000 |
| Total | $21,000 |
