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5 October, 19:42

At December 31, 2014 and 2015, Plank Corp. had outstanding 4,000 shares of $100 par value 8% cumulative preferred stock and 20,000 shares of $10 par value common stock. At December 31, 2014, dividends in arrears on the preferred stock were $16,000. Cash dividends declared in 2015 totaled $60,000. What amounts were payable on each class of stock?

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  1. 5 October, 20:02
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    For preference stock, the dividend is $50,000 and for the common stock it is $10,000

    Explanation:

    The computation of each class of stock is shown below:

    For preference shareholders = Number of shares * price per share * rate + preferred stock dividend

    = 4,000 shares * $100 * 8% + $16,000

    = $32,000 + $18,000

    = $50,000

    The total cash dividend declared is $60,000

    So, for common stock it would be equal to

    = Total cash dividend - preference stock dividend

    = $60,000 - $50,000

    = $10,000
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