ABC Co. has no-par Common Stock and 5% Preferred Stock with $100 par value. If ABC declares a cash dividend which of the statements is true?

The Board of Directors may decide the allocation of the dividends between the Common and Preferred shareholders

If the Preferred Stock is cumulative, and the dividends paid were insufficient to satisfy the current year dividend, then dividends in arrears exist at year end.

Preferred shareholders receive dividends first. If dividends in arrears exist, the corporation must pay additional dividends within one year to satisfy this preference.

Common Shareholders receive dividends first. Preferred Shareholders receive any dividends in excess of the amount given to common shareholders.

Answer rating: 100% (QA)

The correct statement is If the Preferred Stock is cumulative and the dividends paid were insufficie... View the full answer