Anders, Inc., has 5,000 shares of 5%, $100 par value, cumulative preferred stock and20,000 shares of $1 par value common stock outstanding at December 31, 2011. Therewere no dividends declared in 2009. The board of directors declares and pays a $45,000dividend in 2010 and in 2011. What is the amount of dividends received by the commonstockholders in 2011? a. $15,000b. $25,000c. $45,000d. $0

Question

Logan Padilla

Business

6 February, 16:39

Anders, Inc., has 5,000 shares of 5%, $100 par value, cumulative preferred stock and20,000 shares of $1 par value common stock outstanding at December 31, 2011. Therewere no dividends declared in 2009. The board of directors declares and pays a $45,000dividend in 2010 and in 2011. What is the amount of dividends received by the commonstockholders in 2011? a. $15,000b. $25,000c. $45,000d. $0

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Answers (1)

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Jon Bender · Answer 1

Option (A) is correct.

Explanation:

Total dividends = $45,000 (Paid in 2010 and 2011)

common stock outstanding = 20,000 shares

Preferred dividend:

= No. of shares * Par value * 5%

= 5,000 * $100 * 5%

= $25,000

Dividends received by the common stockholders in 2011:

= Total dividends - Preferred dividend

= ($45,000 * 2) - ($25,000 * 3)

= $90,000 - $75,000

= $15,000