Saturn Corporation has 13,000 shares of 14 %, $ 81 par noncumulative preferred stock outstanding and 26,000 shares of nominuspar common stock outstanding. At the end of the current year, the corporation declares a dividend of $ 197,000. How is the dividend allocated between preferred and common stockholders?

Question

Janae Conway

Business

11 May, 12:33

Saturn Corporation has 13,000 shares of 14 %, $ 81 par noncumulative preferred stock outstanding and 26,000 shares of nominuspar common stock outstanding. At the end of the current year, the corporation declares a dividend of $ 197,000. How is the dividend allocated between preferred and common stockholders?

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Answers (1)

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Brandon Mcintosh · Answer 1

The dividend allocated between preferred and common stockholders is $147,420 and $49,580 respectively

Explanation:

We know that the total dividend amount declares is $197,000 out of which first preference stockholders will get the dividend and afterwards equity stockholders will give.

The computation of the preference stockholders dividend is shown below:

= Number of shares * dividend rate * per share value

= 13,000 shares * 14% * $81

= $147,420

And, the total dividend declared is $197,000

So, for the common stockholders, the dividend would be

= $197,000 - $147,420

= $49,580

All other information which is given is not relevant. Hence, ignored it