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2 April, 17:33

Prime Company began operations in January, 2019, by issuing 5,700 shares of 9%, cumulative, $65 par value preferred stock and 25,000 shares of $8 par value common stock. Prime Company paid $26,000 of dividends in 2019, they paid $35,000 of dividends in 2020, they paid $38,000 of dividends in 2021, they paid $24,000 of dividends in 2022, and they paid dividends of $50,000 in 2023. Calculate the amount of the $50,000 dividend paid in 2023 that was paid to common stockholders.

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  1. 2 April, 17:46
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    Preference dividend = 9% x $65 x 5,700 shares

    = $33,345

    Dividend paid to ordinary shareholders = $50,000 - $33,345

    = $16,655

    Explanation:

    The dividend paid to preferred stockholders is 9% of the par value multiplied by number of preferred stock outstanding. The dividend paid to common stockholders is the difference between total dividend paid and dividend paid to preferred stock holders.
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