Sterling Garde, Inc., has 90,000 shares of $1.35 preferred stock outstanding in addition to its common stock.
Question:
Preferred dividend, (90,000 shares × $1.35 per share).............. $121,500
Common dividend (remainder: $500,000 − $121,500) ............. 378,500
Total dividend........................................................................... $500,000
Answer these questions about Sterling Garde’s cash dividends.
1. How much in dividends must Sterling Garde declare each year before the common stockholders receive any cash dividends for the year?
2. Suppose Sterling Garde, Inc., declares cash dividends of $550,000 for 2012. How much of the dividends goes to preferred? How much goes to common?
3. Is Sterling Garde’s preferred stock cumulative or noncumulative? How can you tell?
4. Sterling Garde, Inc., passed the preferred dividend in 2011 and 2012. Then in 2013, Sterling Garde declares cash dividends of $1,600,000. How much of the dividends goes to preferred? How much goes to common?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom
Question Posted: