Question

Diazlo Corporation has 10,000 shares of 7​%, $10 par cumulative preferred stock and 47,000 shares of common stock outstanding. Diazlo declared no dividends in 2017 and had no dividends in arrears prior to 2017. In 2018​, Diazlo declares a total dividend of $45,000. How much of the dividends go to the common​ stockholders?A. $44,000 B. $41,000 C. $47,000 D. None of above

Answer 1

Answer: None of above

Explanation:

Firstly, we calculate the annual dividend on the preferred stock which will be:

= 10,000 × 7% × $10

= 10,000 × 0.07 × 10

= $7000

Dividend paid to shareholders will be:

= $7000 × 2 = $14000

The dividend that goes to the common​ stockholders will now be:

= $47000 - $14000

= $33000

Therefore, the answer is none of the above