Winston Corporation has 9,000 shares of 4 %, $10 par cumulative preferred stock and 47,000 shares of common stock outstanding. Winston declared no dividends in 2017 and had no dividends in arrears prior to 2017. In 2018 , WinstonWinston declares a total dividend of $54,000. How much of the dividends go to the common stockholders?

Question

Business

Abigail Dickerson

7 June, 13:43

Winston Corporation has 9,000 shares of 4 %, $10 par cumulative preferred stock and 47,000 shares of common stock outstanding. Winston declared no dividends in 2017 and had no dividends in arrears prior to 2017. In 2018 , WinstonWinston declares a total dividend of $54,000. How much of the dividends go to the common stockholders?

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KC · Answer 1

Total dividend for common stockholders = $46,800

Explanation:

Given:

Number of Cumulative share = 9,000

Price of each share = $10

Dividend rate = 4% = 4/100 = 0.04

Cumulative number of year = 2

Total Declared dividend = $54,000

Computation of Total dividend for common stockholders:

Total dividend each year = Number of Cumulative share * Price of each share * Dividend rate * Cumulative number of year

Total dividend each year = 9,000 * $10 * 0.04 * 2

Total dividend each year = 7,200

Total dividend for common stockholders = Total Declared dividend - Total dividend each year

Total dividend for common stockholders = $54,000 - $7,200

Total dividend for common stockholders = $46,800