Practice Question 17 Blowing Rock Inc has 5000 shares of 5 1

Practice Question 17

Blowing Rock Inc. has 5,000 shares of 5%, $100 par value, cumulative preferred stock and 30,000 shares of $1 par value common stock outstanding at December 31, 2017. There were no dividends declared in 2015. The board of directors declares and pays a $45,000 dividend in 2016 and in 2017. What is the amount of dividends received by the common stockholders in 2017?

$15,000

Solution

dividends received by the common stockholders in 2017 $15,000 Statementshowing Computations Paticulars 2015 2016 2017 Total Dividend Paid                                -                45,000.00                 45,000.00 Preference Dividend to be paid = 5000*100*5%                25,000.00              25,000.00                 25,000.00 Preference Dividend Paid = Existing + arrears                                -                45,000.00                 30,000.00 Dividend available for common stock                                -                               -                   15,000.00 Arrears of preference Dividend                25,000.00                5,000.00                                 -