The Pratt Company earned $140,000 last year. The capital stock of the company consists of $600,000 of 8% cumulative preferred stock and $600,000 of common stock. The directors declared a dividend of half of the earnings. During the previous year, the company earned only enough to pay a 6% dividend on preferred stock. What is the total amount that will be paid to the holders of preferred stock?

Answer rating: 100% (QA)

First lets calculate the total earnings available for dividends Total earnings 140000 Dividend decla... View the full answer