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14 November, 11:54

Maker-Bot Corporation has 10,000 shares of 10%, $90 par value, cumulative preferred stock outstanding since its inception. No dividends were declared in the first two years. If the company pays $400,000 of dividends in the third year, how much will common stockholders receive?

A. $355,000

B. $270,000

C. $0

D. $130,000

E. $140,000

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  1. 14 November, 12:14
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    How much will common stockholders receive

    D. $130,000

    Explanation:

    Total Dividends to Preferred Stockholders

    10.000 Shares

    10% cumulative preferred stock outstanding

    $90 Par Value

    Dividends: 10,000 * 10% * $90 = $90.000

    Preferred dividends in arrears for two years.

    $90,000*2 Years = $180.000

    Preferred dividends for the current year

    $90,000

    Total Dividends to Preferred Stockholders

    $180,000 + $90,000 = $270,000

    Total Dividends to be paid by the company

    $400,000

    Preffered Stockholers : $270,000

    Common Stockholers: $130,000
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