QS 11-10 Dividend allocation between classes of shareholders LO C2

Stockholders equity of Ernst Company consists of 75,000 shares of $5 par value, 7% cumulative preferred stock and 255,000 shares of $1 par value common stock. Both classes of stock have been outstanding since the companys inception. Ernst did not declare any dividends in the prior year, but it now declares and pays a $100,000 cash dividend at the current year-end. Determine the amount distributed to each class of stockholders for this two-year-old company.

Par Value per Preferred ShareDividend RateDividend per Preferred ShareNumber of Preferred SharesPreferred Dividend for two yearsCalculation of Preferred Dividend:%Total cash dividendTo preferred shareholdersTo common shareholders